ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- VŨ NGỌC MINH SOLUTION TO STRENGTHEN BAD DEBT PROCESSING AT VAMC GIẢI PHÁP TĂNG CƯỜNG XỬ LÝ NỢ XẤU TẠI VAMC LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH HÀ NỘI - 2020 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- VŨ NGỌC MINH SOLUTION TO STRENGTHEN BAD DEBT PROCESSING AT VAMC GIẢI PHÁP TĂNG CƯỜNG XỬ LÝ NỢ XẤU TẠI VAMC Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS. PHẠM THỊ THANH HÒA HÀ NỘI - 2020 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com DECLARATION The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in other’s research and article. The other’s research result and documentation (extraction, table, figure, formula,and other document) used in the thesis are cited properly and the permission (if required) is given. The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration.
LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT I have gained huge knowledge, skill and insights from my MBA course. The course raises my capacity of administration and management up to the next level. I am now very confident in my position of management. I would like to extend my sincerest thanks and appreciation to all those who have made this Thesis to be possible.
I woud like to express my great gratitude to my supervisor Pham Thi Thanh Hoa for her useful comments, remarks and engagement during my process of doing this master thesis. Sincere thanks are extended to the Faculty of International Training - Vietnam National University, Hanoi for equipping me with huge knowledge and skills through various interesting and practical subjects. I also would like to thanks my classmates for their friendship and reciprocal encouragement to make our class time to be unforgettable time. Lastly, I would like to give my great thanks to my wife, my kids, and my family who always standby me during the past two years and encourages me to keep moving from the beginning of my study.
LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SOLUTIONS TO IMPROVE THE MODEL AND ENHANCE THE HANDLING OF BAD DEBTS FOR VAMC 1. Summary of the results The study of solutions to improve the model and enhance the handling of bad debts for VAMC has achieved some research objectives as follows: Firstly, systematize the theoretical basis for bad debts, trading bad debts, focus on presenting the contents and factors affecting bad debt trading activities at AMCs. In addition, the study also highlights AMC's experience in handling bad debts in some countries in the world and from that draw experience for AMC in Vietnam. Secondly, analyze the status of dealing with bad debts at VAMC for the period of 2016-2018, thereby making comments and assessments of the actual management of bad debt trading at VAMC, indicating the achieved and surviving results as well as the root causes of the problems in trading, handling bad debts at VAMC during the past time.
Thirdly, based on the results of the situation analysis, the study proposes solutions to enhance the handling of bad debts at VAMC until 2025. The proposed solutions include: Restructuring the organizational structure, improving efficiency results of VAMC; Human resource development; Upgrading information technology infrastructure; Solutions on capital and financial capacity; Solutions to perfect the picture of trading and handling of bad debts of VAMC. Applicability in practice In the context that Vietnam does not use budget capital, VAMC has been the most effective and feasible tool to handle bad debts, contributing to solving difficulties for enterprises with debt restructuring and interest rate reduction and exemption, even accessing loans of credit institutions. As a newly established institution with many difficulties, the initial results of VAMC have supported to accelerate the handling of bad debts.
In the next phase, VAMC needs to focus all its efforts on debt settlement (selling debts, selling assets, etc.) and buying debts at market prices for newly arising bad debts, gradually reducing debt purchase by special bonds. VAMC operates in a centralized debt management model. Finding solutions to strengthen the management of bad debt trading at VAMC is a practical requirement. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.
Further research orientations If there are further research conditions, the author will focus on further research on debt settlement procedures of VAMC, combined with the collection and aggregation of additional VAMC activity data to expand the research results. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com INDEX INDEX. i LIST OF ACRONYMS. v CHART AND IMAGES.
Urgency of the research. Research subject and scope. 7 CHAPTER 1: BASIC ISSUES ON BAD DEBT AND BAD DEBT TRADING, HANDLING ACTIVITIES OF ASSET MANAGEMENT COMPANIES. Overview of bad debts in the commercial banks.
Definition of bad debts. Bad debt characteristics. Causes of Bad debts. Impacts of Bad debts.
Basic issues on bad debt purchasing, selling handling of AMCs. Definition of bad debt purchasing and selling. Significance of bad debt purchasing and selling. The main contents of purchasing, selling and handling Bad debts at AMCs.
Factors affecting bad debt trading. International experience and lessons for Vietnam. Experience of some countries in the world. Lessons learned for Vietnam in trading, dealing with bad debts.
25 i LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER II: CURRENT SITUATION OF THE MODEL AND MECHANISM OF TRADING AND HANDLING OF BAD DEBT IN VAMC. Overview of VAMC's characteristics, models and performance. Background of foundation and development of VAMC. Main activities and right of VAMC.
VAMC's responsibilities and roles. Current situation of VAMC's model, activities of buying, selling and handling bad debts. Situation of legal framework, organizational model and structure of VAM. Actual situation of trading, dealing with bad debts at VAMC.
Results of trading, dealing with bad debts of VAMC. Assess the status of the model and mechanism of trading and handling Bad debts of VAMC. Cause of the limitation. Orientation and operational goals of VAMC to 2025 and vision to 2030 .1 Operational orientation of VAM .2 Operational objectives of VAMC .3 Requirements in operation management of VAMC.
Solutions to strengthen trading, handling bad debts for VAMC. Restructuring the organizational structure, improving the operational efficiency of VAMC .2 Human resource development .3 Upgrade information technology infrastructure.4 Solutions on capital and financial capacity .5 Solution to complete the picture of trading and handling bad debts of VAMC. 81 ii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.6 Creating a centralized bad debt trading market in which VAMC plays a central role of the market. Proposals to the National Assembly.
Proposals to the National Assembly. Proposals to the Ministries/Branch Departments. 90 iii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF ACRONYMS 1 VAMC Viet Nam asset management company 2 GDP Gross domestic product of goods and services 3 EU European Union 4 AEG The Advisory Expert Group 5 WTO World Trade Organization iv LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLES Table 2.2: Total value of issued special bonds .3: Total value of remaining special bonds being monitored .4: Classify collaterals from purchased debts .5: Bad debt trading result at VAMC's market price .1: Result of dealing with bad debts after trading of VAMC. 58 v LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHART AND IMAGES Image 2.1: Operation model of VAMC .2: Flowchart of the process of buying debt by special bonds .3: Flowchart Debt purchase proposal .4: Flowchart The process of restructuring debt purchase by secured bonds.5: Flowchart Proposal for debt sale .6: Flowchart of the process of selling collateral of secured debts.
51 vi LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Urgency of the research Nowadays, in the crisis and stagnant economy context due to rapid increase in the ratio of bad debts it is ineffective to let the credit institutions and enterprises handle the problems themselves. A large amount of capital shall be lost from the economy then since the capital cannot be turnaround, the cash flow cannot be circulated, the banking system continues to face difficulties in liquidity. This will threat the sustainable development of the national financial system.
Once bad debts exceed the permitted level, there should be measures to handle the problem from various sides, including measures from the State management agencies. According to international experience, the establishment of a national asset management company (AMC) to stimulate the handling of bad debts is really necessary. The model and mechanism of dealing with bad debts of credit institutions through AMC have been studied and applied by many countries in the world. However, there is no common AMC model for all the countries.
Based on the socio-economic characteristics, financial systems, laws and historical conditions of different countries, each country will have its own model, mechanism of operating and dealing with bad debts through AMC. According to scientific studies, even with the countries with very similar AMC, the results of dealing with Bad debts are still different. This implies that the study of models and mechanisms to handle Bad debts through AMC still need to be improved more. In Vietnam, during the period of 2011-2013, the economy faced numerous difficulties, in which the constantly increasing Non-performing loan (BAD DEBT) ratio and existing credit risks did seriously affect liquidity and safety of the Credit Institution System.
Bad debts of the Banks are considered as a "blood clot", causing blockages of capital flows, leading the capital flow among sectors of the economy to be delayed, especially capital flows into production and business sectors. Therefore, dealing with Bad debts is no longer the task of the banking sector. The political system has also managed to handle Bad debts of the credit institutions. On May 18th, 2013, the Government issued Decree No.
53/2013/NĐ-CP establishing 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Vietnam Asset Management Company (VAMC) to focus on Bad debts on the credit system system at the national level. During the operation, the legal regulations on operational mechanisms and professional regulations by VAMC have been constantly improved to suit the reality. As a good result, after one year of operation, VAMC purchased 275,331 billion dongs of outstanding principal balance. However, purchasing outstanding principal balance still faced many difficulties due to various reasons.
Decree 53/2013/NĐ-CP and Decree No. 34/2015/NĐ-CP (amended) stipulating the operation scope of VAMC cover quite a lot of contents. However, due to some other relevant regulations, VAMC still does not have enough power and adequate mechanisms to implement. In addition, buying, managing and handling purchased Bad debts of VAMC still remain many problems (many mechanisms and policies on handling security assets still faces dificulties without creating favorable conditions to deal with Bad debts, protecting the legitimate interests of the creditors; Besides, procedures of initiating lawsuits, adjudicating and executing civil judgments are complicated, slow and prolonged).
Due to above reasons, it is necessary to study solutions to improve the model and enhance the handling of Bad debts for VAMC. Research overview Dealing with Bad debts and the mechanism to handle Bad debts in credit institutions have been studied by many authors in various materials sofar. However, the solutions to enhance bad debt handling at Asset Management Company have not been widely mentioned.