VietNamNet Bridge - Vietnam was expected to establish a debt trading market in 2015, but the Ministry of Finance cannot say clearly when the legal framework for the market will be set up.

The State Bank of Vietnam's head office

The total balance-sheet bad debt of the entire banking system by the end of March 2018 had accounted for 2.18 percent of total outstanding loans.

It’s difficult to put mortgaged assets for public sale

The National Citizen Bank (NCB) said that assets mortgaged by Huu Lien A Chau JSC to collect debt of VND358 billion incurred by the company had been seized. 

The seized mortgage is Huu Lien A Chau’s right to use three land plots. The company has not fulfilled its debt payment obligations since 2011 and 2012.

NCB is not the only creditor of Huu Lien A Chau. Sacombank, BIDV, First Commercial Bank and Malayan Banking Bhd have provided loans to the company, while the loan from Sacombank is overdue.

Analysts commented that under the current laws, it is not easy to seize the assets mortgaged by borrowers for loans. 

Though Huu Lien A Chau mortgaged its assets at many different credit institutions, NCB may meet difficulties when seizing assets without consent from Huu Lien A Chau.

Huu Lien A Chau has more than one creditor, and therefore, it is necessary to refer to current laws about the order of creditors to seize collateral.

A report shows that in 2013-2017, the Vietnam Asset Management Company (VAMC), the ‘super company’ established to help settle bad debts of the banking system, collected VND81.28 trillion and sold VND14.29 trillion worth of bad debts. 

In 2018, the company plans to settle VND140 trillion worth bad debts it has bought, which accounts for 45 percent of total balance-sheet bad debts (VND307.932 trillion).

Sacombank, after several failures selling three land plots in Long An province, which are the collateral related to Tram Be’s group of businessmen, has decided to sell the assets by instalment.

To date, Sacombank has collected VND920 billion, or 10 percent of the value of the three land plots. The remaining money will be paid under the deferred mode within seven years, with the two first grace years.

VAMC’s chair Nguyen Tien Dong said commercial banks have to foreclose on mortgaged assets to collect debts. However, they are meeting difficulties doing this.

A banker said it takes a lot of time to deal with mortgaged assets, especially when new circumstances are found, or one of the parties declares bankruptcy. 

Nguyen Tri Hieu, a banking expert, said though the government’s Resolution 42 mentions the establishment of a debt market, there is no legal framework for the market operation.

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