Asia: Bad debt woes still plague Vietnam

Bad debts have been plaguing Vietnam’s economy since 2012 where it was estimated to be equivalent to 11% of the GDP, and mainly consisted of real estate mortgages. In an effort to consolidate Vietnam’s banking sector, the government set up its first-ever bad-debt bank – Vietnam Asset Management Corp (VAMC) in the following year (2013). VAMC has since rescued over 40 banks by buying out their bad debt ($12 billion), and managed to recover approximately 18% of the debts bought from troubled banks mainly through sale of collateral.

Despite the actions which have already been taken to combat bad debt, issues remain for Vietnam. As a result, the State Bank of Vietnam (SBV) has decided to draft a new law. Strategies to allow weaker banks to file for bankruptcy are pivotal additions to the drafted law to help resolve bad debt. Currently, Vietnam is forecasted to require $25 billion to clean bad debt off their books, equivalent to 13% of the country’s GDP.

Upcoming Events
01
Feb
18
UK Business Banking Forum 2018
London, England, United Kingdom
22
Feb
18
Australian Mortgage Innovation Summit 2018
Sydney, NSW, Australia
22
Feb
18
Australian Lending Awards 2018
Sydney, NSW, Australia
22
Mar
18
Canadian SME Banking Forum 2018
Toronto, ON, Canada
See all upcoming events
map4
Subscribe to receive insights delivered straight to your inbox
Latest news, unbiased expert analysis and insights across banking and finance