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| Deputy Prime Minister Nguyen Van Ninh was appointed chairman of the steering board in charge of tackling bad debt. — VNA/VNS Photo Duy Khuong |
HA NOI (Biz Hub)— Prime Minister Nguyen Tan Dung has set up an inter-disciplinary steering board to lead the mammoth projects of restructuring credit institutions by 2015 and resolving bad debts of the system.
In the new decision, Deputy Prime Minister Nguyen Van Ninh will take the hot seat of the board, and State Bank of Viet Nam's Governor Nguyen Van Binh will be the deputy chairman.
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Office bearers on the steering board are:
1. Chairman: Deputy Prime Minister Nguyen Van Ninh;
2. Deputy Chairman: State Bank of Viet Nam's Governor Nguyen Van Binh;
The members of the board are:
3. State Bank of Viet Nam's Governor Dang Thanh Binh;
4. Government Office's Deputy Chairman Nguyen Van Tung;
5. Deputy Minister of Industry and Trade Tran Quoc Khanh;
6. Deputy Minister of Information and Communications Truong Minh Tuan;
7. Deputy Minister of Public Security To Lam;
8. Deputy Minister of Planning and Investment Dao Quang Thu;
9. Deputy Minister of Finance Tran Xuan Ha;
10. Deputy Minister of Natural Resources and Environment Pham Ngoc Hien;
11. Deputy Minister of Justice Dinh Trung Tung;
12. Deputy Minister of Construction Tran Van Son;
13. Government Deputy Chief Inspector Ngo Van Khanh;
14. Ha Noi Municipal People's Committee Vice Chairman Nguyen Van Suu;
15. HCM City Municipal People's Committee Vice Chairwoman Nguyen Thi Hong.
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The board will advise the Prime Minister in implementing and coordinating measures to reschedule and resolve the bad debts of the banking system. Also, the board will help ministries and municipal bodies supervise, detect and handle issues emerging from the policy practices related to bad debts at credit institutions.
Viet Nam's banking restructuring plan, targeted for completion by 2015, was initiated last April to improve the resilience of the money system, which is one of three key reforms of the economy, the other two being reform of the State-owned enterprises and public investment.
Under the roadmap, Viet Nam first saw the merger of SHB and Habubank in August 2012 and then of Western Bank and PVFC, a subsidiary of the petroleum conglomerate PVN, in the first half of last year. Such shotgun weddings were quick responses to rescue these institutions from severe liquidity problems and mounting, huge bad debts of the state corporations and their affiliates.
The government is battling to root out the deep-seated disease of non-performing loans (NPLs), which has one of Asia's highest ratios, that has troubled the economy and led to a tightening of the credit policy to boost consumer spending and keep businesses afloat.
According to the State Bank of Viet Nam, the bad debt ratio of the banking system was 3.63 per cent last December. If the restructured bad debts are included, the bad debt ratio was estimated at no more than 9 per cent of the total assets.
The Government aims to curb the bad debt ratio to between 3 and 4 per cent of the total lending by the end of 2015.
This year, the state-owned Viet Nam Asset Management Company (VAMC) plans to buy NPLs worth between VND70 and 100 trillion, or between US$3.33 and 4.76 billion, through special bonds. However, there will be pressure to sell and handle the purchased debts in 2014. Therefore, VAMC is preparing a plan for debt trading at market prices.
Last year, VAMC purchased VND39 trillion, or $1.8 billion, in bad debts, of which VND200 billion, or $9.4 million, were recovered. — VNS