A rendering of a high-end real estate project in Phú Quốc. Real estate accounts for 70 per cent of all assets mortgaged for loans in Việt Nam. — VNA/VNS Photo

State-owned Vietinbank in Phú Quốc is cutting the auction price of 10 land plots on Phú Quốc Island by 14 per cent, lowering the price to VNĐ26 billion (over US$1 million) from nearly VNĐ30 billion, in an effort to recover loans from a borrower.

The plots, totaling over 1,400 square metres and registered under one individual, will be auctioned on November 7 in Rạch Giá Town.

The highest starting price is now VNĐ4.4 billion, down VNĐ800 million, while the lowest is VNĐ2.1 billion, down nearly 13 per cent. Bidders need to deposit 10 per cent of the starting price for the auction.

This is not the first time the person’s assets will be auctioned by Vietinbank to recover debts.

In July 2022, the lender sold eight plots of land in Dương Đông Town in Phú Quốc for over VNĐ25.3 billion.

Banks across the country have been struggling to find buyers for mortgaged assets such as land, villas and houses.

Real estate makes up 70 per cent of all assets mortgaged for loans, and is the most likely to be auctioned to recover debts.

Việt Nam is currently struggling with non-performing loans, posing a threat to its banking system.

According to the financial statements of nearly 30 banks, their total bad debts exceeded VNĐ271.5 trillion as of the end of June, a surge of nearly 21 per cent from the end of last year.

The Asian Development Bank has also warned of potential risks to the banking system stemming from irregularities in corporate bond issuances and real estate market. — VNS