Banks selling mortgaged assets to recover bad debts
The Viet Dragon Securities Company (VDSC) said that bad debts might continue to increase slightly this year, after a circular allowing banks to reschedule debt repayment periods and maintain the debt group for certain sectors expired at the end of 2024.
The entrance gate to Hanoi’s Ciputra Urban Area, where banks are selling apartments and villas. (Photo: cafef.vn)
Hanoi (VNS/VNA)ᩚᩚᩚᩚᩚᩚᩚᩚᩚ𒀱ᩚᩚᩚ - Many banks are rushing to sell mortgaged assets to recover bad debts, as these types of debts are forecast to increase slightly this year.
VietinBank has recently announced a plan to auction off assets to recover debts from Bio-Zem Joint Stock Company. The auctioned asset is a 145sq.m apartment in Hanoi’s Ciputra Urban Area. VietinBank offers a starting price of 8.8 billion VND for this asset.
Agribank has also announced the auction of two luxury villas in the Ciputra Urban Area owned by another individual. The first property, which is a 400sq.m villa, is mortgaged for loans to Thanh An Trading Company Limited and Dung Phat Trading and Construction Company Limited. The starting price for the asset is VNĐ166.5 billion, a decrease of more than 38 billion VND compared to the previous offering in August 2024.
The second property is a 230sq.m villa and is secured for a loan from Minh Ngoc International Import-Export Investment Trading Company Limited. The starting price of this property is 75.3 billion VND, a decrease of more than 17 billion VND compared to the offering in August 2024.
BIDV has recently announced the auction of all debts of the Phu Son Cement Joint Stock Company. One of the assets securing the loan is VIP Hanoi International Primary School.
The Phu Son Cement Joint Stock Company's debt at BIDV as of November 15, 2024 is more than 19.7 million EUR (20.5 million USD), of which the principal balance is 7 million EUR and interest debt is more than 12.7 million EUR. The value of the debt after conversion at November exchange rates is more than 529 billion VND, and BIDV wants to sell the debt at a starting price equal to the value of the debt.
Banks are also selling cars to recover debts.
GPBank has announced the auction of a used Audi car at a starting price of more than 1.3 billion VND.
BIDV has also chosen an organisation to auction assets including 14 KIA trucks. All of these vehicles were registered in 2019 in Hanoi for a starting price of more than 1 billion VND.
In a recent report on the banking industry, the Viet Dragon Securities Company (VDSC) said that bad debts might continue to increase slightly this year, after a circular allowing banks to reschedule debt repayment periods and maintain the debt group for certain sectors expired at the end of 2024.
Specifically, the outstanding debts that were restructured under Circular 02/2023/TT-NHNN as of the end of August 2024 stood at about 126 trillion VND. Part of this outstanding debt may become bad debt this year.
However, VDSC analysts believe that the rise in bad debt after Circular 02 expires will not greatly affect the ability to control bad debts on the banks’ balance sheet, because many banks have taken relatively sufficient measures to stabilise it. In the list of 10 banks that VDSC monitors, the restructured debt balance has gradually decreased and stabilised at around 40 trillion VND in the past year.
VDSC estimates the provisioning ratio and restructured debt balance to be above 50%. The expiration of Circular 02 is expected to affect bad debts at a few private banks in 2025./.
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