Vietnamese “bad debt bank” now open for business

Mission is to prevent collapse of battered Vietnamese banks.

The business of the Vietnam Asset Management Company (VAMC), a "bad debt bank" that began operations recently, is to rescue dozens of banks crippled by Asia's highest ratio of non-performing loans (NPLs).

Analysts said the plans of the State Bank of Vietnam, the central bank, for VAMC remains vague, however. SBV officials have shed little light on how the asset management firm will operate.

SBV governor Nguyen Van Binh sought to temper expectations about the VAMC. He said the bad debt bank’s aim is to bring NPLs down to a "manageable" level by 2015

"This is not a magic wand to make all bad debt disappear. It's just a tool to help solve the bad debts in the banking system," he said during the recent launching of VAMC.

What is clear, however, is that VAMC will buy NPLs only on property assets in return for "special bonds.”

VAMC's working capital is US$23.6 million, which the World Bank has criticized as “miniscule."

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