Banks massively sell collateral: Lowering prices is still weak

Since the beginning of May, Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) has issued dozens of notices about the auction. collateral. Currently, Vietinbank wants to transfer all debts (principal, interest, fees…) incurred with Dai Loc Petroleum Trading and Transport Co., Ltd at Thu Duc branch to handle debt recovery. The total outstanding balance of this loan as of May 13 is more than 119 billion VND. The collateral for the loan is the land plot at 336 Nguyen Chi Thanh, Ward 5, District 10, Ho Chi Minh City and some other assets.

VietinBank also announced the selection of a unit to evaluate the collateral for the debt of VND 1,364 billion of Vo Thi Thu Ha Import-Export Trading Co., Ltd. This debt is secured by a series of real estate such as 4 plots of land in Tan An commune, Thu Dau Mot town, Binh Duong province; 5 plots of land in Chon Thanh town, Chon Thanh district, Binh Phuoc province and many other land lots, factories, and rice warehouses owned by Vo Thi Thu Ha Company in Dong Thap province.

At the same time, the Bank for Agriculture and Rural Development of Vietnam (Agribank) continuously issued dozens of notices of auctioning land lots to settle debts. Specifically, Agribank is selling collateral for the debt of PMC Construction Investment Joint Stock Company arising from September 2012 with a value of VND 32.2 billion, as of May 31, 2021. Collateral is 261.6 m2 of land at 11 Bui The My, Ward 10, Tan Binh District, Ho Chi Minh City. The starting price offered is VND 20.6 billion, nearly 40% lower than the loan value.

Agribank will also sell 2 plots of land as collateral, measuring 2,743.1 m2 in Hoc Mon district, Ho Chi Minh City with a starting price of VND 46.7 billion to recover a debt of VND 61.8 billion.

According to PV Tien Phong’s information, in the past few months, banks have stepped up their bad debt handling and recovery activities through the sale of a series of debts and collaterals with a value ranging from a few dozen to a few hundred. billions dong. Agribank’s website has issued 60 notices on asset auction, debt auction, selection of asset auction organization, and collateral appraisal. Other major banks also issued similar announcements, such as BIDV with 40 notices, VietinBank with 24 notices and Vietcombank with 11 notices…

Lowering the price by tens of billions is still not expensive

Notably, many banks are promoting the auction of collateral assets that were previously unsuccessfully offered for sale. Only thing, the starting price this time is many times lower than before. In the latest announcement, Agribank for sale 3,071.2 m2 of land and attached houses at 309 Binh Quoi, Ward 28, Binh Thanh District, Ho Chi Minh City. This is the property of Mr. Tran Dinh Tan and Ms. Pham Thi Thu Nga used as collateral for the loan of Thai Duong International Import-Export Trading Production Co., Ltd and V.Life Trading-Service Co., Ltd. according to the credit contracts signed by the two sides from 2018-2019. Agribank offers a starting price for the land plot of nearly 167 billion VND. In April 2021, Agribank itself also offered to sell this land lot for 198 billion dong, but no investors bought it.

Vietcombank is auctioning the collateral of the Petroleum Design Consultancy Company with the starting price of 270.6 billion VND to recover the debt. The property to be auctioned is 20% of the contributed capital of the Petroleum Design Consultancy Corporation in the PV Gas Tower building in Ho Chi Minh City. Previously, Vietcombank had repeatedly offered to sell debts related to this project, but there were no buyers. The last time, Vietcombank offered to sell debt with a starting price of more than 340 billion dong.

Vietcombank is also for sale as a collateral of Evergreen Vietnam Technology Co., Ltd. with a starting price of nearly 1,100 billion VND. That is the right to use the land plot of 30,000 m2, works and all machinery of Evergreen Vietnam Company in VSIP II Industrial Park. The above-mentioned price is reduced by nearly 100 billion VND compared to the time of sale in November 2021.

At BIDV, in dozens of notices of property auctions, debts from the beginning of May also have many debts that have been announced many times but have not yet been purchased.

Difficult situation of the bank

The reason for the phenomenon of banks selling properties at a continuous decrease in price but still being empty, economic expert Can Van Luc said, the main reason is the long difficult post-COVID-19 economy, the trading market. low liquid assets. In addition, the collateral is not sold at too much discount, so each time the sale is sold, the price only drops, causing the property to be auctioned 5 to 10 times, still unsuccessful.

Banking and finance expert Nguyen Tri Hieu said that the liquidation of collateral assets of low value (a few billion dong would be easier to handle). With properties worth tens to hundreds of billions of dong, it usually takes banks many times to sell, even dozens of times to sell and then lower the price to liquidate.

According to expert Nguyen Tri Hieu, this is an opportunity for investors and home buyers to buy. Selling collateral to deal with bad debts is a must-have measure at the moment, when banks are also under a lot of pressure. It is possible to face a legal vacuum and pressure on bad debt ratio in the future.

Specifically, Resolution 42/2017/QH14 of the National Assembly on piloting bad debt settlement will expire in August 2022, so banks must speed up the process of liquidation and auction of collateral.