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| The opening of VAMC is expected to help decrease bad debts to manageable levels by 2015. — Photo Viet Thanh |
HA NOI (Biz Hub) — The Vietnam Asset Management Company (VAMC), a powerful legal entity established to restructure the bad debts of the State Bank of Viet Nam (SBV), officially began operations in Ha Noi on Friday.
The opening ceremony was attended by representatives from the Party, National Assembly, Government, ministries, international organisation, banks and credit institutions.
Speaking at the event, SBV's Governor Nguyen Van Binh said in accordance with regulation, VAMC is expected to help decrease bad debts to manageable levels by 2015.
He said VAMC will play an important role in the context that bad debts have surpassed the ability of every credit institution to solve. However, VAMC can not solve the bad debts issue alone but will also co-ordinate with the various ministries and sectors.
VAMC, having a chartered capital of VND500 billion (US$23.8 million), will work in a non-profit capacity. It is responsible for preserving and developing the State's capital.
The company's activities will include buying bad debts from credit institutions; revoking, recovering, buying and selling debts and assets; investing, contributing capital and buying shares.
Newly-appointed chairman of the VAMC's board Dang Thanh Binh said banks with bad-debt ratios of three percent and above will be required to sell its bad debt to the VAMC. The company will purchase the bad debts of credit organisations in two ways: By buying bad loans at their book value through the issuance of VAMC's special bonds, or at market value by using other sources.
The bonds will be valid for five years with a zero percent interest rate. The banks will have five years to free themselves of bad debts, but they will still have the responsibility of managing the debts.
During the five year period, the banks will have to make an annual provision of 20 percent for the bonds.
Nguyen Huu Thuy, General Director of VAMC, told the Banking Times that to help credit institutions restructure their operations quickly, it needed an asset management company with strong financial resources that is supported by special regulations issued by the Government and the National Assembly.
In addition to capital resources from the Government and domestic investors, Thuy said VAMC expects to receive support from foreign investors as well.
VAMC is expected to help the country to resolve roughly VND80-100 trillion (US$3.8 -4.7 billion) in bad loans with a projected loan recovery rate of 20-40 per cent.
VAMC's headquarter is located at No. 22, Hang Voi Street, Hoan Kiem District, Ha Noi. It's transaction address from now until December 31, 2013 is the fourth floor, E building area, Dao garden, Phu Thuong Ward, Tay Ho District. — VNS