Banks urgently recover bad debts by massively selling

18-Sep-2020 Intellasia | Tien Phong | 6:02 AM Print This Post

Recently, the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) in Ben Thanh branch announced an auction of the debt of more than 272 billion dong of Pham Ton Company Limited. The collateral was five land-use rights in Hochiminh City, Binh Duong Province, and 14 cars. BIDV also auctioned many assets, including land use rights and construction works on the 2,675-square-metre area of Crystal Palace Wedding Convention centre in Tan Phu Ward, District 7, Hochiminh City with the system of machinery and equipment including a set of transformers, connection system for transformer stations, generator complex and all furniture, tools of Crystal Palace building.

BIDV also announced to choose an auction organisation for collateral as land use rights and future land-attached assets under the Kenton Node project (Nha Be district, Hochiminh City). All principal and interest arising at the auction time amounted to 4.063 trillion dong. BIDV in Gia Dinh Branch had also repeatedly offered to sell dozens of apartments in The Ky Nguyen Era Town apartment, Phu My Ward, District 7, Hochiminh City. The starting selling price fluctuated from 2.1 billion dong to 5.5 billion dong per unit.

Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) offered to sell the right to use more than 6,300 square meters of land in Tan Phu district of Tan Phong Construction Investment and Real Estate Corporation to recover the debt. This land lot was located at 245/61B Hoa Binh, Hiep Tan Ward. The starting price was 355 billion dong, excluding value-added tax (VAT). It was expected that the auction would take place in early October 2020. Investors who want to participate must place five percent of the starting price of the property in advance, equivalent to 17.75 billion dong.

Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) was also selling land-use rights and land-attached assets at 41-45 street 281 Ly Thuong Kiet, Ward No.15, District No.11. Notably, the property attached to the land was a nine-storey Ngan Kieu Hotel with more than 4,000 m2. The starting price for this property was 122 billion. Also, Sacombank continued to sell many properties such as real estate, production, and business establishments in the districts of Hochiminh City, many frontage locations in Districts No.3, No.5, No.11, and so on, with the total asset value of the real estate for sale up to trillions of dong.

Joint Stock Commercial Bank for Industry and Trade of Vietnam (VietinBank) announced the auction of collateral of Gnotech Co., Ltd with the starting price of nearly 28 billion dong to handle and recover the total loan as of 31/7/2020 at nearly 141 billion dong.

The collateral for this debt included machinery and equipment for the production of tempered glass, which was invested in 2016, and the entire factory of Vinapoly Co., Ltd, located in An Binh Ward, Bien Hoa City, Dong Nai Province.

In early July 2020, VietinBank announced to sell many collateral assets. For example, this bank announced the auction of collateral that was land use rights, ownership of houses, and other land-attached assets at Can Tho centre Shopping Complex, with 3.23 hectares and the starting price at 190 billion dong. Also, there were 30 land use rights and assets associated with the land area of more than 5 hectares in Ky Son District (Hoa Binh Province).

Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) also announced to auction the collateral that was land use rights and construction on land at 543 Highway No.62, Quarter No.5, Ward No.2, Kien Tuong Town, Long An province, which had an area of more than 143,178m2 with machinery and equipment of Ngoc Mekong Company. The total starting price was more than 78 billion dong.

Talking to Tien Phong Newspaper reporter, an independent economist, Le Minh Hoang, said that many banks were actively promoting the sale of collateral of customers to recover debts when the Covid-19 epidemic lasted. This fact made the production and business activities of enterprises more difficult. Since the beginning of the year, the bad debt had been increasing because the Covid-19 epidemic had harmed the production, business, and the debt repayment capacity of enterprises.

From then to the end of the year, the epidemic was still unpredictable; the production and business activities continued to face difficulties, so the bad debt of the banking industry would increase. It was not easy for banks to keep selling bad debts, said Le Minh Hoang.

Nguyen Duc Thach Diem, general director of Sacombank, also said that, by 2022, Sacombank would complete the collateral of bad debts to finalise the Vietnam Asset Management Company (VAMC) bonds, reduce the provision for risk. However, due to several objective factors such as prolonged epidemics, unfavourable real estate market, the complete handling of bad debts could last until 2023.

Meanwhile, the financial and banking expert, Nguyen Tri Hieu, said that in the context of the real estate market facing many difficulties due to the Covid-19 pandemic, the sale of collateral that was real estate to recover bad debts was not easy for banks. The bank debts sold to VAMC were mainly real estate. Therefore, the speed of handling bad debts depended a lot on market movements.

In addition to legal procedures for handling and transferring collateral, there were still many problems that discouraged buyers. Thus, although the bank had repeatedly lowered the selling price, there were still not many investors interested. This was a critical bottleneck that needed to be removed if banks want to boost the debt trading market.


Category: Finance, Vietnam

Print This Post