Vietnam Establishes Bad Debt Resolution Company to Stabilize Financial System

The Vietnamese government has established the Vietnam Credit Institutions Asset Management Company (VAMC), a state-owned enterprise, with the aim of stabilizing the domestic financial system and promoting healthy credit extension. The company, established by the State Bank of Vietnam (SBV) under Government Decree No. 359/2026/ND-CP dated September 17, 2026, will specialize in the resolution of non-performing loans (NPLs). The VAMC will operate as a special type of single-member limited liability company, with 100% of its charter capital owned by the SBV. Its core operational principles are to cover costs with revenue and not to pursue profit. Transparency and openness will be prioritized in the acquisition and resolution of NPLs, with efforts focused on mitigating risks and costs. The company is authorized to purchase NPLs from Vietnamese credit institutions, joint-venture credit institutions, wholly foreign-owned credit institutions, and foreign bank branches at market value or through the issuance of special bonds. Purchased NPLs can also be converted into NPLs acquired at market value. Borrowers who sell their NPLs to the VAMC may continue to receive credit from credit institutions or foreign bank branches if they have feasible production, business plans, or investment projects. The VAMC's initial charter capital is VND 5 trillion (approximately USD 20 million). Any additional capital investment will be decided by the competent authorities in accordance with regulations on the management and investment of state capital in enterprises. The company's headquarters will be located in Hanoi, with branches and representative offices to be established in major cities upon approval from the SBV. The management structure of the VAMC will include a Board of Members, a Control Board, and a General Director. The Chairman and members of the Board of Members, the head and members of the Control Board, and the General Director and Deputy General Directors will be appointed and dismissed by the Governor of the SBV. This initiative represents a significant step in maintaining the health of Vietnam's financial sector and addressing NPL issues, which is crucial for supporting the country's sustained economic growth. While Vietnam has experienced remarkable economic development in recent years, ensuring the stability of its financial system remains a key priority.