Banks in Vietnam settled a total bad debt of VND85 trillion (USD4.04 billion) by themselves between early 2012 and the end of July this year, according an official from the State Bank of Vietnam (SBV).

Bad debt is not only an issue for banks but also affects enterprises as well as the whole economy.

SBV Deputy Governor Dang Thanh Binh said, local banks have been actively dealing with their bad debts. The settlement of debts, mounting up to VND85 trillion, is good news for the banking sector. The rate of bad debt in June of this year is down 4.68%, much lower than what was forecast.

Binh noted that bad debt is not only an issue for banks but also affects enterprises as well as the whole economy.

SBV has instructed to restructuring eight commercial joint stock banks with ineffective operations. Three among the four big state-owned banks namely Vietcombank, VietinBank and BIDV have also been urged to privatise.

The deputy governor added that from now to 2015, SBV will try to rearrange bad-performing banks through different measures such as mergers and acquisitions. Also, foreign financial institutions may  be allowed to invest in these banks.

Deputy Governor Dang Thanh Binh is also the Chairman of the Board of Members of newly-established Vietnam Asset Management Company (VAMC) which is expected to settle between VND40 trillion (USD1.42 billion) and VND70 trillion (USD3.33 billion) in bad debts this year.