Ex-Lehman CEO bullish on VN debt
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Former CEO of Lehman Brothers Bank John Sheehand says foreign investors are eager to pour billions of dollars into Vietnam's debt market.
During a seminar here on Thursday, the Economist for Capital Service Group joined a range of experts to discuss the removal of non-performing loans (NPLs) from Vietnam’s banking industry.
Sheehand said most US investors were interested in purchasing real-estate debts while Japanese and EU investors were eyeing smaller debts in the market.
Investors were struggling to find the best mechanism to funnel investment into the market, he said.
Truong Thanh Duc, chairman of the Banking Legislation Club, said Vietnam lacked the huge capital reserves to alleviate bad debt and needed funds from foreign investors.
The country’s policies provided significant obstacles to foreign investment in bad debts, he said.
Speaking to Bloomberg, Nguyen Huu Thuy, general director of the Vietnam Assets Management Company (VAMC), revealed that foreign investors had expressed interest in cooperating with the company to purchase Vietnamese debt.
“VAMC has been operating for three weeks and we have received interest from TPG Growth of private-equity investment firm Standard Chartered,” he said.
While no deal has been signed, negotiations are expected to continue.
Many anticipate the deal will be subject to delays while authorities scramble to develop regulations guiding the purchase and sale of bad debts handled by VAMC and rules on assets, risk and special purpose bonds.
There are no concrete regulations governing the sale of debt between commercial banks and VAMC.
Meeting with VAMC this week, Simon Andrews, the East-Asian manager for the International Finance Corporation (IFC), pledged the IFC’s support for VAMC in addressing NPLs.
In two months, VAMC will purchase 10 trillion dong worth of bad debts from 10 commercial banks.
Experts predict up to 30 trillion dong of bad debts will be removed from the industry this year by VAMC.
The figure is well below the benchmark set by Nguyen Van Binh, governor of Vietnam’s State Bank, who predicts the removal of 40 trillion-70 trillion dong of NPLs.
Analysts have emphasised the importance of developing clear regulations to encourage credit institutions to sell NPLs and to entice foreign investors.
