(VEN) - Bad debt is a burning issue drawing high concern from the community as well as the National Assembly and Government authorities. Finding solutions to bad debt to make the banking system operate safely and effectively while promoting economic growth has become an urgent necessity. Experts, managers and organizations issued different assessments of the bad debt situation in the Vietnamese commercial banking system. A State Bank of Vietnam report showed that the bad debt rate in the banking system was 3.39 percent in late 2011. According to reports by credit institutions, the bad debt rate was 4.47 percent as of May 31, 2012. Reviewing the banks' operations in the first half of this year, a State Bank of Vietnam representative said that the bad debt rate was 8.6 percent and bad debts amounted to VND202 trillion as of March 31, 2012. Fitch Ratings assessed that the bad debt rate in the Vietnamese banking system is currently 13 percent. State Bank of Vietnam Governor Nguyen Van … [Read more...] about Authorities discuss ways to tackle bad debt
Bad debt allowance
Increasing capital flow to cope with bad debt By Ngoc Tran in HCMC Staffers of a commercial bank in HCMC handle stacks of Vietnam dong banknotes. By end-2011, the total amount lent to businesses had reached around VND2,580,000 billion, of which VND258,000 billion has now turned bad and half of this bad debt is irrecoverable - Photo: TL The State Bank of Vietnam has proposed setting up a company with initial capital of VND100,000 billion to trade bad debt in the banking system. Is it possible that this company alone can resolve the problem? High on the country’s economic agenda this year is the restructuring of the banking system to make it healthier and more efficient. In doing so, the authorities will have to deal with hefty bad debt. Ambivalence about a debt trading company According to Nguyen Van Binh, governor of the State Bank of Vietnam, bad debt held by banks has risen to 10% of total funds borrowed, almost the same as the ratio forecast by foreign organizations. By … [Read more...] about Increasing capital flow to cope with bad debt
A view of a Maritime Bank branch in Ho Chi Minh City. Economists warn that a central bank plan to buy banks’ non-performing assets could bring back inflation Economists say the central bank should be cautious with its plan to buy distressed debt from banks to avoid too fast an increase in money supply, which could again spark off high inflation. The plan to establish a company under the management of the State Bank of Vietnam to trade bad debt worth some VND100 trillion (US$4.8 billion) was mooted after loans contracted in the first five months. Though no further details have been announced, Le Xuan Nghia, former vice chairman of the National Financial Supervisory Council, said the news of the debt relief plan has cheered up the market. The increasing bad debts have made banks hesitant to lend, stymieing credit expansion, and they would boost lending once the bad debt problem is resolved, he said. Truong Van Phuoc, general director of Eximbank, said a system to trade … [Read more...] about Central bank urged to tread carefully with bad debt bailout
Governor of the State Bank of Vietnam Nguyen Van Binh said the bad debt ratio has increased from 3.2 percent earlier this year to 3.6 percent by mid April. However, other calculations show that the bad debt ratio is 3-4 times higher than the released figure. The 2012 annual report about Vietnam’s economy conducted by the Vietnam Center for Economics and Policy Research VEPR under the Economics University, an arm of the Hanoi National University, shows that the bad debt ratio of the Vietnamese banking system is estimated at between 8.25 and 14.01 percent. The report has also shown the forests by other institutions about the unknown. According to StoxPlus, the average bad debt ratio of the analyzed banks is 2.3 percent. Meanwhile, Fitch Ratings believes that the Vietnamese banks’ debt ratio is at 13 percent. Quoting Ho Ba Tinh, an analysis, the research team said the bad debt ratio of banks may reach 7-8 percent, or even over 10 percent, or about 300 trillion … [Read more...] about Vietnamese banks’ bad debt ratio remains an unknown
The non-performing loan (NPL) situation in Vietnam proves to be worse than previously thought. Dealing with bad debts is one of the most important things Vietnam needs to do in the banking restructuring. The Standard & Poor's question Together with Moody, Fitch Rating and Credit Suisse, Standard & Poor (S&P) Câu hỏi của Standard & Poor has paid its special attention to the macroeconomic and financial problems in Vietnam in recent years. In early November 2011, in its latest report, S&P lowered its assessment about the risk of the Vietnamese banking system from the ninth grade to the 10th, the lowest in the 10-scale ranking of the credit rating firm. This means that in the eyes of S&P, Vietnamese banking system is facing a very high risk level. With the adjustment in the latest report, Vietnamese banking system has been put together with Greece and Belarus, the economies with very high risks. What are the reasons which make S&P keep such a … [Read more...] about Dealing with bad debts, how?