In order to help weak banks, Vietcombank would have to help them to collect debts. The loans to real estate developers account for a big proportion of the banks’ outstanding loans. Meanwhile, the gloomy real estate market makes it impossible to sell real estate products to pay bank debts.“We have considered the mortgaged assets of one or two banks that the watchdog agency has suggested. Most of the land plots are located in provinces, and it will be very difficult to transfer the assets or sell to collect debts,” the executive said.As such, selling mortgaged assets would be the biggest interest of the banks which have to act as the supporters. The auditing and defining of the value of weak banks would be undertaken by the central bank. However, it is unclear if the central bank would intervene to help speed up the dealing with the mortgaged assets?In this case, debt trading companies should get involved in the restructuring process.The Debt and Asset Trading Corporation DATC put under the management of the Ministry of Finance is the first company banks think about. DATC has got involved in the business restructuring process, but it has not put hand into any deals of bank restructuring.In principle, DATC can come forward and buy back the real estate which are the assets mortgaged for the loans, so as to help banks clear debts and start a new development stage. After that, DATC can manage the assets they buy, exploit them for profit and then seek the clients to buy them at favorable moments.However, the problem is that the financial circle does not put high hopes on DATC, because DATC is a state owned company and it needs to make profits, and it is not a non-profit organization.In fact, most of the banks have debt trading companies which can buy the mortgaged assets of weak institutions. However, it is necessary to have a reasonable mechanism to encourage the companies to buy the assets and accept risks.Should Vietnam invite “vultures”?In fact, the bad debts with mortgaged assets have caught special attention from domestic and foreign risk trading institutions, which the finance circle calls “vulture.”However, before Vietnam calls for the subjects, weak banks need money to pay the matured deposits to people. And in order to do that, it is necessary to, once again--set up a reasonable policy. For example, if A bank lends to B bank so that B can pay deposits to people, A should be supported by the decision to allow A to enjoy lower tax rates or get refinancing.Vietnamnet/ Source: TBKTSG
Who will buy mortgaged assets?
After BIDV, Vietinbank has raised its voice, stating that it is ready to join the bank restructuring process. Vietcombank has not made any official announcement, but an official said the watchdog agency has suggested that the bank would give support to some weak banks.Debt trading companies – where are they?Vietcombank has much experience in reviving weak banks. In late 1990s, Vietcombank played the main role in recovering Eximbank which was then in big difficulties. At that time, Vietcombank contributed 50 billion dong, or 25 percent of Eximbank’s chartered capital, and sent one of the best managers to Eximbank – Truong Van Phuoc, who has been on the post of general director of Eximbank since then.However, it is really more complicated to support banks nowadays. A bank has the chartered capital of 3 trillion dong at least, and the total assets of 15-20 trillion dong, which means that the scale of a bank now is much bigger than that in the past. Will Vietcombank be able to give trillions of dong to a bank, then? In order to help weak banks, Vietcombank would have to help them to collect debts. The loans to real estate developers account for a big proportion of the banks’ outstanding loans. Meanwhile, the gloomy real estate market makes it impossible to sell real estate products to pay bank debts.“We have considered the mortgaged assets of one or two banks that the watchdog agency has suggested. Most of the land plots are located in provinces, and it will be very difficult to transfer the assets or sell to collect debts,” the executive said.As such, selling mortgaged assets would be the biggest interest of the banks which have to act as the supporters. The auditing and defining of the value of weak banks would be undertaken by the central bank. However, it is unclear if the central bank would intervene to help speed up the dealing with the mortgaged assets?In this case, debt trading companies should get involved in the restructuring process.The Debt and Asset Trading Corporation DATC put under the management of the Ministry of Finance is the first company banks think about. DATC has got involved in the business restructuring process, but it has not put hand into any deals of bank restructuring.In principle, DATC can come forward and buy back the real estate which are the assets mortgaged for the loans, so as to help banks clear debts and start a new development stage. After that, DATC can manage the assets they buy, exploit them for profit and then seek the clients to buy them at favorable moments.However, the problem is that the financial circle does not put high hopes on DATC, because DATC is a state owned company and it needs to make profits, and it is not a non-profit organization.In fact, most of the banks have debt trading companies which can buy the mortgaged assets of weak institutions. However, it is necessary to have a reasonable mechanism to encourage the companies to buy the assets and accept risks.Should Vietnam invite “vultures”?In fact, the bad debts with mortgaged assets have caught special attention from domestic and foreign risk trading institutions, which the finance circle calls “vulture.”However, before Vietnam calls for the subjects, weak banks need money to pay the matured deposits to people. And in order to do that, it is necessary to, once again--set up a reasonable policy. For example, if A bank lends to B bank so that B can pay deposits to people, A should be supported by the decision to allow A to enjoy lower tax rates or get refinancing.Vietnamnet/ Source: TBKTSG
In order to help weak banks, Vietcombank would have to help them to collect debts. The loans to real estate developers account for a big proportion of the banks’ outstanding loans. Meanwhile, the gloomy real estate market makes it impossible to sell real estate products to pay bank debts.“We have considered the mortgaged assets of one or two banks that the watchdog agency has suggested. Most of the land plots are located in provinces, and it will be very difficult to transfer the assets or sell to collect debts,” the executive said.As such, selling mortgaged assets would be the biggest interest of the banks which have to act as the supporters. The auditing and defining of the value of weak banks would be undertaken by the central bank. However, it is unclear if the central bank would intervene to help speed up the dealing with the mortgaged assets?In this case, debt trading companies should get involved in the restructuring process.The Debt and Asset Trading Corporation DATC put under the management of the Ministry of Finance is the first company banks think about. DATC has got involved in the business restructuring process, but it has not put hand into any deals of bank restructuring.In principle, DATC can come forward and buy back the real estate which are the assets mortgaged for the loans, so as to help banks clear debts and start a new development stage. After that, DATC can manage the assets they buy, exploit them for profit and then seek the clients to buy them at favorable moments.However, the problem is that the financial circle does not put high hopes on DATC, because DATC is a state owned company and it needs to make profits, and it is not a non-profit organization.In fact, most of the banks have debt trading companies which can buy the mortgaged assets of weak institutions. However, it is necessary to have a reasonable mechanism to encourage the companies to buy the assets and accept risks.Should Vietnam invite “vultures”?In fact, the bad debts with mortgaged assets have caught special attention from domestic and foreign risk trading institutions, which the finance circle calls “vulture.”However, before Vietnam calls for the subjects, weak banks need money to pay the matured deposits to people. And in order to do that, it is necessary to, once again--set up a reasonable policy. For example, if A bank lends to B bank so that B can pay deposits to people, A should be supported by the decision to allow A to enjoy lower tax rates or get refinancing.Vietnamnet/ Source: TBKTSG
