Banks struggle to liquidate collateral, lowering prices is still weak

Lowering the price of collateral many times still failed

The Bank is promoting bad debt settlement through the auction of debts and collateral. However, many banks are still struggling to liquidate collateral. Many debts of great value, even though their prices have been lowered many times, are still not available for sale for many years. There are many bad debts with adequate collateral, but banks still find it difficult to liquidate.

Only in the first half of May, Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) issued dozens of notices about the auction of assets and debts to recover and handle bad debts. Most of the debts being sold by this bank are of great value from a few dozen to several hundred billion dong.

In particular, VietinBank Uong Bi has just announced the auction of debts of Quang Trung Industry Group Joint Stock Company (Quang Trung Group). The starting price for the above debt announced by VietinBank is VND 460,412 billion, equal to the debt value. In case the first auction with the above starting price is unsuccessful, the bank will reduce the starting price to continue auctioning the debt, each time reducing the price by no more than 10% of the starting price of the auction. failed before.

Similarly, VietinBank Phuc Yen Branch (Vinh Phuc) has just offered to sell all debts incurred at Hai Phu Ngoc Co., Ltd. The debt value as of May 13 is 55.2 billion dong.

VietinBank also recently offered to sell a debt of 161.5 billion VND of Phuc Dat Joint Stock Company at Hai Duong Branch, the starting price is 105.6 billion VND. This means that the bank accepts to give up nearly 55.6 billion dong of interest in this loan to recover.

Recently, the Joint Stock Commercial Bank for Investment and Development of Vietnam, South Hanoi Branch (BIDV South Hanoi) announced the 11th auction of the debt of Ngoc Linh Co., Ltd. with a starting price of more than VND 1,154 billion. For the first time for sale at the end of 2020, BIDV offered a starting price of this debt up to VND 2,100 billion. But after 10 unsuccessful sales, BIDV accepted to lower the price by nearly half to 1,154 billion dong, which means that the bank accepted to spend more than 1,000 billion dong of interest arising in this loan to recover the principal. .

BIDV also repeatedly auctioned off a debt of VND 1,035.5 billion of Khai Vy Group Joint Stock Company, but it was unsuccessful.

Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) has also repeatedly auctioned collateral assets of Evergreen Vietnam Technology Co., Ltd. The starting price for sale in the last time at the end of March was 988.9 billion VND, down more than 110 billion VND compared to the announcement in early March.

Vietcombank also auctioned or agreed to sell a debt of more than VND 79 billion of Hung Hung Import-Export Co., Ltd. In which, the value of principal debt is only 29.2 billion VND, the rest is interest debt.

Or Agribank Saigon Central Branch also recently offered to sell the debt of New Saigon Real Estate Development Co., Ltd. The property includes 6 land use rights and buildings attached to more than 1,900 m2 of land at 20 Tran Cao Van (District 1, City) with a starting price of nearly 430 billion VND.

It is not easy to sell collateral to recover debt

Explaining the reason why banks offer collateral for sale, despite the continuous decline in prices, experts say that the main reason is due to the prolonged post-Covid-19 difficult economy, the financial trading market, etc. low liquidity. Up to now, although the economy is gradually recovering, it is not easy to find investors with enough financial capacity to buy back large-scale debts.

The liquidation of low-value collateral is easier to handle. As for properties of great value, from tens to hundreds of billions of dong, it will be more difficult to sell. It usually takes banks many times to sell and then lower the price to liquidate.

The auction of real estate as collateral has many legal procedures related to mortgage release and asset valuation. Many mortgages are real estate that requires the consent of the property owner. There are many plots of land as collateral for debts related to many organizations and individuals, so the ownership transfer takes a long time.

Moreover, many collateral assets are priced at a value that is not close to the market price, so even if the price is reduced, it is still difficult to sell. The collateral property cannot be sold at too much discount, so each time the sale is sold, the price only drops, causing the property to be auctioned many times but still unsuccessful.

Banks are having to speed up the process of liquidation and auction of collateral, especially in the context that bad debts are expected to have a high risk of increasing when many regulatory policies are about to expire. After June 30, Circular 14/2021/TT-NHNN regarding debt rescheduling, exemption and reduction of interest and fees, and retention of debt groups in order to support customers affected by the Covid-19 pandemic. will expire. Resolution 42/2017/QH14 on piloting bad debt settlement of credit institutions will also expire this August.

Tuan Dung

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