When commercial banks complained at a meeting held in HCM City two weeks ago that they had no more debts to sell as requested, the State Bank replied that it was sure the bad debt ratio was not lower than VND300 trillion.

 

 

 

 

According to the State Bank, the non-performing loan (NPL) ratio decreased sharply from 4 percent in June 2014 to 3.22 percent on December 31, 2014, or VND127.851 trillion.

Prior to that, on September 29, 2014, answering queries before the National Assembly’s Steering Committee, Governor of the State Bank Nguyen Van Binh for the first time a]]said the NPL had reached VND500 trillion and VND240 trillion had been settled by that time.

Two weeks ago, the State Bank stated that commercial banks have to sell VND100 trillion worth of bad debts to the Vietnam Asset Management Company (VAMC), the institution established to help banks restructure banks’ debts. Every bank received a document from the State Bank which said how much debt it must sell.

Bankers have complained that the NPL amounts they are requested to sell are “too high”, while some said they have no more debts to sell.

It seems that commercial banks have told the truth. Information on the State Bank’s official website shows the total outstanding loans of the banking system had reached VND3.970.548 trillion by December 31, 2014, and that the NPL ratio had decreased significantly from 4 percent in June 2014 to 3.22 percent, or VND127.851 trillion.

If commercial banks sell VND100 trillion to VAMC as requested, they would only have VND28 trillion worth of NPL, which accounts for a very small proportion of the total outstanding loans.

And if the banks’ NPL is as low as reported, there is no need for the State Bank to urge banks to sell debts in such large quantities.

Explaining this, an official of the State Bank said the figures shown on the website are statistics reported by commercial banks. Meanwhile, the figure released by the State Bank’s inspectors is different.

What is the real NPL ratio the State Bank’s inspectors have found?

In October 2011, the State Bank’s Governor said before the National Assembly that the bad debt ratio was approximately 10 percent.

Later, the State Bank’s inspectors, at meetings, said the ratio was around 8 percent.

The figure coincides with the figure about the maximum NPL, at VND300 trillion, the State Bank said at a meeting two weeks ago.

At the end of the meeting, the State Bank promised to discuss with every commercial bank the debt it has to sell.

However, to date, no bank has reached a consensus with the State Bank about the debts it should sell.

TBKTSG