The State Bank of Vietnam (SBV) cooperated with the World Bank Group (WBG) to organize a workshop on “Non-performing loan resolution in Vietnam: Reducing risks in the banking sector and improving economic prospects” in Hanoi on September 26.
Attending the workshop were SBV Deputy Governor Nguyen Thi Hong; Mr. Achim Fock, Portfolio & Operations Manager in the WB office in Vietnam; Ms. Beatrice Maser, Ambassador of Switzerland to Viet Nam, representatives from SBV Department of Legal Affairs, Banking Supervision Agency, Vietnam Asset Management Company (VAMC); WBG specialists and representatives from commercial banks and international credit institutions.
Speaking at the workshop, Deputy Governor Nguyen Thi Hong emphasized: “The restructuring of the system of credit institutions in collaboration with NPL resolution for 2016-2020 period is fundamentally important to tackle obstacles and limitations of credit institutions system, at the same time, promote encouraging results in the process of implementing Decision No. 254/QĐ-TTg dated March 1, 2012 of the Prime Minister for the prudent and sustainable development of credit institutions towards 2020”.
The one-day workshop was divided into 4 sessions focusing on (i) NPL supervisory expectation; (ii) approaches in NPL resolution; (iii) country experience in NPL resolution; (iv) developing markets for distressed asset. The objective of workshop was to exchange experience of WBG in NPL resolution in several countries; SBV’s policies on NPL resolution; banking reforms over the past time and dissemination of Resolution on pilot measures to resolve NPLs by the SBV.
Discussing at the workshop, several specialists assessed that Vietnamese credit institutions obtained encouraging results in NPL resolution over the past time. NPLs have been curbed, bringing NPL ratio in the balance sheet back to 2.55% of the total credit outstanding at the end of 2015. VAMC has functioned as a special tool to assist credit institutions in allocating expenses for handling NPLs, supporting restructuring of enterprises, thus contributing to resolving NPLs and promoting reasonable credit growth for the economy. The NPL resolution has initially achieved satisfactory results; however, the current value of NPLs and debts that potentially become NPLs are still huge, which pose potential risks to the safety and efficiency of credit institutions. Moreover, mechanisms and policies on NPL resolution and foreclosure of collateral are insufficient and not synchronous.
At the workshop, representatives from the SBV presented a number of substances related to Resolution No.42 and Decision No.1058; practical management of the system of credit institutions in Vietnam, difficulties and obstacles in monitoring, NPL resolution and measures of resolving NPLs. At the same time, WBG experts shared their experience in monitoring, NPL resolution, and foreclosure of collateral of NPLs in several countries for participants’ discussion to draw lessons in the process of restructuring, managing and resolving NPLs in Vietnam.
Le Hang