Vietnam encouraging foreign firms to buy NPLs from local credit institutions

HO CHI MINH CITY – The State Bank of Vietnam has issued a new Circular 09/2015 setting out new regulations on the non-performing loans secondary market, effective from September l, opening the way for a potential source of foreign buyers to create a busier debt trading market in Vietnam.

In its monthly review, Vietnam Asset Management says the Circular sets out clear and strict regulations relating to the responsibilities of NPL buyers and sellers,  with the aim of preventing possible abuses in the debt trading market.

Foreign credit institutions with bad debt ratios below 3% may participate in the NPL buying process, subject to prior approval from the SBV, and their activities in selling NPLs are not required to obtain SBV approval.

VAM says total NPLs purchased by the State-owned Vietnam Asset Management Corporqtion (VAMC) total approximately US$8.4 billion to date, but this company, wholly-owned by State Bank of Vietnam, has been able to sell only about US$359 million to investors so far due mainly to a limited source of buyers. www.vietnamam.com (ATI).