The government will approve a decree to set up a national asset management company to boost the resolution of bad debts according to a local official.
Minister and Chairman of the Government Office Vu Duc Dam said the Vietnam Asset Management Company (VAMC) was only one of many measures to deal with bad debts in the current context. Before the company is established, the State Bank of Vietnam (SBV) and commercial banks had made efforts to settle their bad debts.
However, the minister said each bank had to form their own hedge funds under the State Bank of Vietnam’s instruction.
The VAMC, under the SBV’s management will help banks and enterprises to deal with their bad debts quickly. The VAMC is supposed to play an important role in controlling bad debts which is the main culprit for weak liquidity in the banking system.
The company has received the Politburo’s in-principle approval. The government discussed the roadmap to establishing the company at a meeting last month, but until now nothing seems to have happened.
By the end of February this year, Vietnam’s bad debt rate reduced to 6pct against 8pct of 2012.