The State Bank of Vietnam (SBV) officially announced the establishment of the  Vietnam Asset Management Company (VAMC) today, July 26, with registered capital of VND500 billion (USD23.76 million).

VAMC established to help banks and enterprises to deal with bad debt

The company's headquarters will be 22 Hang Voi in Hanoi’s Hoan Kiem District, however, it will be temporarily located at the SBV’s Banking Inspection and Supervision Agency at Tay Ho District until the end of this year.

VAMC mission is to purchase bad debts from financial institutions, provide debt restructuring and guarantee continued operations of enterprises, organisations and individuals through guaranteed loans.

Financial institutions that have bad debt rates of at or over 3% of their total outstanding loans will have the option to sell their bad debts to VAMC.

VAMC was set up as a non-profit organisation with the purpose of restructuring credit institutions and improving the economy. Collateralised debt held by VAMC will be exempt from taxes, according to the NA Finance and Budget Committee.

VAMC’s management structure consists of members council, a board of directors and a board of controllers.

Dang Thanh Binh, Deputy SBV Governor, has been appointed as chairman of the company’s Members Council and Nguyen Huu Thuy, of the SBV’s Banking Inspection and Supervision Agency will act as VAMC’s general director.

VAMC is expected to help deal with between VND80 and VND100 trillion (USD3.8 billion- USD4.75 billion) worth of bad debts, accounting for between 20% and 40% of total bad debt in the country per year.

It is estimated that the company's annual revenues will be between VND60 billion and VND160 billion (USD2.85 million – USD7.6 million), which is expected to be enough to cover its business costs.