Recently, banks have been continuously promoting the handling of bad debts, even some banks issued several dozen property auction notices within a month.
Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank), Saigon Hanoi Commercial Joint Stock Bank (SHB), Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), and Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) are the banks with the highest possibility of losing capital (Group V debt), recently actively announced the recovery, liquidation of collaterals and debts.
For BIDV, currently, the bank has 10.492 trillion dong of debt in group V, accounting for nearly 50 percent of the bank’s total bad debts, equivalent to 0.98 percent of its total outstanding debts. In September alone, BIDV’s branches issued more than 40 announcements about the option to organise collaterals auction. In October and November, this bank also issued nearly 20 notices of asset sales.
VietinBank is the second bank in terms of debt value with potential loss of 7.521 trillion dong, accounting for 0.84 percent of outstanding loans. Bad debt ratio of the bank stay at 1.47%, down 11 basis points. This is also a bank that continuously announces the liquidation of collaterals, most of which is land use rights and assets attached to the land. Since the beginning of the year, VietinBank has had nearly 70 notices of withdrawal, sale and disposal of collaterals.
SHB ranked third in the value of potentially irrecoverable debt with nearly five trillion dong, accounting for 2.07 percent of the bank’s total outstanding loans. Since the beginning of the year, this bank has had nearly 60 notices of seizing collaterals.
As for Sacombank only, it has recently liquidated real estate valued at trillions of dong.
The above actions of the banks took place after Resolution 42 on handling bad debts was officially approved by the National Assembly in mid-August 2017, many banks and credit institutions pushed up the recovery and liquidation of collaterals.
The data updated by Governor Le Minh Hung in the recent report on the implementation of the National Assembly’s questioning resolutions shows that from 2012 to the end of August 2019, the whole system of has handled nearly 970 trillion dong of bad debts.
Particularly, the results of handling bad debts were determined under Resolution 42, accumulated from August 15, 2017 to the end of August 2019, the entire credit institution system processed over 236 trillion dong (excluding using risk provision and debt sold to VAMC through special bond issuance).
In which, solving bad debts in the balance sheet reached 137 trillion dong; dealing with debts of nearly 48 trillion dong that are off-balance sheet under Resolution 42; settling bad debts under Resolution 42 sold to VAMC which is paid with special bonds of 51 trillion dong.
So, on average, the whole system handles about 9.6 trillion dong each month, 4.7 trillion dong higher than the average bad debt result before Resolution 42 came into effect.
In addition, by the end of August 2019, credit institutions used 123.89 billion dong of risk provisions to handle bad debts.
The settlement of bad debts determined under Resolution 42 shows that customers’ sense of repayment has improved. This is a positive sign showing that Resolution 42 has been promoting efficiency, contributing to solving difficulties and obstacles and promoting the handling of bad debts of the credit institutions system.
Despite achieving certain results, according to the State Bank of Vietnam (SBV), bad debts under Resolution 42 still face many difficulties in implementation. For example, the number of cases dealing with bad debts through simplified procedures at the Court is limited. Or as the civil judgment enforcement agency does not have a data system that allows credit institutions to extract and search property information related to the case being processed.
At the same time, there is currently no guidance on the effective early identification mechanism in the appraisal process, to determine which assets are in dispute and which properties are subject to temporary emergency measures.
