VietinBank to establish NPL investment fund

VietinBank fund Management Company is planning to establish a fund that invests in bank bad debts with total investment capital of about US$100 million, Nguyen Anh Tuan, general director of the company said on Monday.
According to Tuan, his company is in contact with foreign investors to raise funds. “Foreign investors are excited about this new type of fund, especially Hong Kong investors,” Tuan said, but added that he could not determine when his company would raise capital for this new fund.

The form of investment funds into the bank’s bad debts is not available in Vietnam but has potential because non-performing loans (NPL) of banks tends to increase during this time due to difficult economic conditions. “This fund will primarily operate for VietinBank’s bad loans – the parent bank’s fund management company,” Tuan said.

According to Tuan, there are three forms of investment with bank NPLs that the fund can carry out. First is the acquisition of the collateral of bad debts, the second is working with banks to reclaim debts, and third is to buy the debts for the purpose to hold stakes in good companies but those are struggling financially.

The National Financial Supervision Committee reported that the total NPLs of the banking system by June 2011 was estimated at about 75 trillion dong, up 50% over the same period. The NPL ratio of total outstanding loans in the banking sector by the end of June had risen 3.1% compared with 2.16% in late 2010. In particular, the bad debts classified in Category 5 (bad debts vulnerable to losing capital) accounted for 47% of the total loans, mainly real estate loans. – Vietbiz24

Tags: NPL investment fund, Vietinbank, Vietnam banking industry, Vietnam finance, Vietnam financial

Posted by VBN on Sep 21 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry