Bad debts to hinder economic growth? (VEN) - Without efforts to resolve bad debts and accelerate the pace of restructuring of commercial banks and state-owned businesses, the Vietnamese economy will likely face a period of long and slow growth, claimed the Asian Development Bank (ADB). Can the VAMC shoulder all debts? The ADB recognizes the Vietnamese Government's recent measures to resolve debts at banks, including establishing the Vietnam Asset Management Company (VAMC). The VAMC recently announced that it would buy VND1,723 billion worth of bad debts from the Bank for Agriculture and Rural Development of Vietnam (Agribank) and would conclude agreements with the Saigon Commercial Joint Stock Bank (SCB), the Sai Gon-Hanoi Commercial Joint Stock Bank (SHB) and the Petrolimex Commercial Joint Stock Bank (PGBank). It expected to buy a minimum VND30 trillion worth of bad debts from now to the end of the year via special bonds in order for credit institutions to receive … [Read more...] about Bad debts to hinder economic growth?
Bad debts meaning
Big state owned commercial banks, with powerful financial capability and their big scale, are believed to get involved in the enterprises’ debt restructuring process. However, the banks themselves would meet big difficulties in dealing with their bad debts if there is no reasonable mechanism for the process. Nguyen Van Binh, when answering the inquiries at the ongoing National Assembly’s session, emphasized that dealing with the bad debts is one of the most important task in restructuring the credit institution system. The bad debts would be handled in different ways. They may be sold to the Ministry of Finance’s Debt and Asset Trading Corporation (DATC), or offset by the banks’ provisioning. Especially, the State may consider clear the debts from irrecoverable loans commercial banks provided per the government’s instruction. Besides, debts would also be sold to non-credit institutions, private debt trading companies or commercial banks’ debt … [Read more...] about How to deal with state owned banks’ bad debts?
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?
Experts have repeatedly given warnings about the bad debt increases, which they believe a big worry to the banking system. The bad debt ratio has increased from 2.53 percent to 3.21 percent if compared with August 2010. According to the State Bank of Vietnam, by the end of August 2011, the first-group debts had accounted for 90.89 percent of the total outstanding loans, while the second-group debts had amounted to 5.89 percent. Meanwhile, the bad debts of third, fourth and fifth groups had reached to 3.21 percent. In Vietnam, loans can be classified into five groups, with the fifth group debts considered the worst debts which can be irrecoverable. If compared the figures with that of July 2011, one would see that the first group debts increased by 0.37 percent, second group decreased by 0.44 percent, while bad debt ratio increased by 0.07 percent. The bad debt ratio of 3.21 percent by the end of August 2011 is described as "acceptable". However, there are two worrying … [Read more...] about Bad debts up, banks may lose 33 trillion dong