On April 20, the Vietnam Asset Management Company (VAMC) announced the auction of a non-performing loan (NPL) tied to a group of individual borrowers, with a total value exceeding $60 million.
According to VAMC, the debt was acquired under market mechanisms through debt purchase agreements signed at the end of 2019 with Sacombank and Agribank’s An Phu branch.
As of February 28, the total estimated value of the debt stands at approximating $60 million. Of this, outstanding principal accounts for approximately $24.95 million, while accrued and overdue interest totals more than $35.12 million.
The starting price for the auction is set at around $60 million, excluding VAT.
Auction dossiers will be available for purchase and submission from April 20 until May 5. The auction is scheduled to take place at 9:00am on May 8 at VAMC headquarters in O Cho Dua ward in Hanoi, and will be conducted through multiple rounds of direct bidding.
Previously, VAMC and diverse commercial banks proposed that the government allow the sale of NPLs at market prices, potentially below their book value, while ensuring full compliance with transparent procedures. The aim is to unlock resources currently tied up in bad debts.
In recent years, banks have mainly relied on their own resources to resolve NPLs, while market-based debt resolution has remained slow despite the official launch of the debt trading platform in 2021.
Tran Trung Dung, VAMC chairman and head of the Debt Settlement Club, said that for the debt trading platform to operate effectively, demand must be stimulated. This requires investors to see the potential to realise profits within a reasonable timeframe.
“This necessitates accepting reasonable discounts to stimulate investor participation in debt resolution and profit realisation within two to three years, particularly in the context of prolonged and shortened procedures and enforcement processes,” Dung said.
He also pointed to a paradox hindering the sale of debts below book value.
“Resolution No.42/2017/QH14 and the Law on Credit Institutions allow credit institutions to sell debts below their original value. However, regulations designed to protect credit officers involved in such transactions remain incomplete and unclear,” he said.
“Issues related to public asset management, inspection, and supervision have made implementation cautious. As a result, while market demand exists, conflicting interests persist – one side seeks profit, while the other fears accountability risks. This has slowed the meeting of buyers and sellers in the market,” Dung added.
A VAMC representative explained that a prerequisite for the formation and development of a debt trading market is a legal framework that protects participating entities. Once the legal environment is completed, the market will operate more efficiently.
According to Dung, debt resolution was previously carried out individually by each credit institution. Currently, through the Vietnam Banks Association, the Debt Settlement Club has been established to enhance coordination across the sector. VAMC has also gained access to data related to bad debts, enabling more proactive connections with credit institutions.
VAMC worked with the Korea Asset Management Corporation in March, and the two sides have largely agreed on technology transfer, support for upgrading the electronic information portal, the application of search and listing technologies for debts, and the transfer of an online auction system.
Dung also stressed the need to improve transparency and standardise market information. In fact, data on bad debts is being gradually refined, while information on collateral assets is also being standardised.
“In the current context, the banking sector faces difficulties in mobilising resources while credit demand remains high. Without attracting foreign investors, the handling of bad debts and asset restructuring will face significant challenges. Therefore, improving mechanisms to entice international resources is essential,” Dung noted.
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