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VAMC to auction bad debts

Vietnam Asset Management Co (VAMC) is allowed to sell debts via auction or competitive bid with the participation of at least three unrelated buyers.

The Circular stipulating VAMC’s purchase, sale and settlement of bad debts signed by the State Bank of Vietnam (SBV)’s governor, effective from September 16, marked the establishment of the debt trading market.

When still being under draft circular, VAMC would be the first organisation being officially allowed to auction bad debts whereby VAMC is allowed to sell bad debts, which were bought from credit institutions, to organisations and individuals according to the market value to recover the capital under the principles of openness, transparency and ensuring the agreement and voluntary in the debt sale.

VAMC is allowed to sell debts via auction or competitive bid with the participation of at least three unrelated buyers in accordance with the law. In case VAMC can not sell debts via auction or competitive bid, it will sell debt based on the direct agreement with the debt buyer.

The debt selling price will be the most reasonable price level based on the comparison with the bid prices for that debt or the reference price of debts that have equivalent quality or the debt value evalused by VAMC or standalone appraisers to reduce the losses in bad debt settlement.

According to the draft circular, VAMC may authorise credit institutions to collect, handle and sell debts and collateral, restructure debts, adjust the debt repayment conditions, convert debt into stake contribution or share capital of customers, invest, repair, upgrade, use and lease the collateral collected by VAMC.

VAMC is expected to get the equivalent amount of 0.5 percent to 1 percent of the debt recovery.

 

 
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