THE STATE BANK OF VIETNAM
Circular No. 14/2015/TT-NHNN dated August 28, 2015 of the State Bank of Vietnam amending, supplementing a number of Circular No. 19/2013/TT-NHNN dated September 06, 2013 of the State Bank Governor providing the purchase, sale and handling of nonperforming loans by the Asset Management Company of Vietnamese credit institutions
Pursuant to June 16, 2010 Law No. 46/2010/QH10 on the State Bank of Vietnam;
Pursuant to June 16, 2010 Law No. 47/2010/QH12 on Credit Institutions;
Pursuant to November 26, 2014 Law No. 68/2014/QH13 on Enterprises;
Pursuant to the Government’s Decree No. 156/2013/ND-CP dated November 11, 2013 of the Government defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;
Pursuant to the Government’s Decree No. 53/2013/ND-Cp of May 18, 2013, on the establishment, organization and operation of the Asset Management Company of Vietnamese credit institutions;
Pursuant to the Government’s Decree No. 34/2015/ND-CP dated March 31, 2015 of the Government amending a number of Articles of the Decree No. 53/2013/ND-CP dated May 18, 2013 of the Government on the establishment, organization and operation of Vietnam Asset Management Company (hereinafter the Decree No. 34/2015/ND-CP);
At the proposal of the Chief of the Banking Inspection and Supervision Agency;
The Governor of the State Bank of Vietnam promulgates the Circular amending, supplementing a number of Circular No. 19/2013/TT-NHNN dated September 06, 2013 of the State Bank Governor providing the purchase, sale and handling of nonperforming loans by the Asset Management Company of Vietnamese credit institutions.
Article 1. To amend, supplement a number of Articles of the Circular No. 19/2013/TT-NHNN dated September 06, 2013 of the State Bank Governor providing the purchase, sale and handling of nonperforming loans by the Asset Management Company of Vietnamese credit institutions:
1. To amend, supplement Article 1 as follows:
“Article 1. Scope of application
This Circular provides the purchase, sale and handling of non-performing loans; the issuance, management and payment of special bonds, bonds issued directly to loan-selling credit institutions to purchase bad debts at the market price by the Asset Management Company of Vietnamese credit institutions (below referred to as Vietnam Asset Management Company).
2. To amend, supplement Clause 5 of Article 3 as follows:
“5. Other organizations and individuals involved in the purchase, sale and handling of non-performing loans; the issuance, management and payment of special bonds, bonds issued directly to loan-selling credit institutions to purchase nonperforming loans at market price by the Asset Management Company of Vietnamese credit institutions.”
3. To supplement Clause 8a and amend, supplement Clause 9 of Article 3 as follows:
“8a. Bonds issued directly to loan-selling credit institutions to purchase bad debts at market prices (hereinafter referred to as bonds) means valuable papers with fix terms issued by the Asset Management Company of Vietnamese credit institutions to the loan-selling credit institutions to purchase bad debts at the market price.
9. Date of issuance of bonds, special bonds means the date when bonds, special bonds become effective that serves as a basis for determining the date of payment of bonds.
4. To amend, supplement Point b Clause 1 Article 4 as follows:
“b. Issuance, management and payment of bonds, special bonds;”
5. To supplement Point dd, e into Clause 1 Article 4 as follows:
“dd. Internal regulations on formation and use of risk provision to handle with risks from nonperforming loans purchased at market prices.
e) Internal regulations on estimating non-performing loans, collaterals of non-performing loans;”
6. To supplement Article 4a into Article 4 as follows:
“Article 4a. Regulations on foreign currency management in the purchase, sale of non-performing loans of the Asset Management Company
1. Asset Management Company, loan-selling credit institutions, purchaser from Asset Management Company, customers and other related parties shall comply with regulations on the limit of using foreign currency in the territory of Vietnam when purchasing, selling and collecting purchased loans.
2. When performing the purchase, sale of non-performing loans with Asset Management Company:
a) The purchaser shall use the account in Vietnam dong to pay for Asset Management Company under the contract for the case of using Vietnamese dong;
b) The purchaser being non-residents use the account in foreign currency opened at credit institutions, foreign bank’s branches that operate legally in the territory of Vietnam or account in foreign currency opened in foreign country to pay for Asset Management Company under the purchase, sale contract for the case of using the purchase currency being foreign currency;
3. When recovering the loan purchased from Asset Management Company, recovered amounts shall be transferred to one account in Vietnam dong and one account in foreign currency (for the loan is recovered by foreign currency) of the purchaser opened at commercial banks, foreign bank’s branches that operate legally in the territory of Vietnam;
4. If the purchase, sale of the loan arising from lending abroad or arising from guarantee professions for guarantee provided for non-residents;
a) The loan-seller (loan-selling credit institutions when selling the loan to Asset Management Company or Asset Management Company when selling the loan) shall register the changes of the loan abroad, recovered amounts guaranteed as stipulated by current regulations on foreign exchange management for lending abroad and recovery of the loan for customers being non-residents;
b) The purchaser (Asset Management Company when purchasing the loan or the purchaser from Asset Management Company being residents) shall register the loan recovery plan as stipulated by current regulations on recovering the loan abroad arising from loan purchase, sale professions;”
7. To amend, supplement the name of Section 2, Chapter 2 as follows:
“Section 2
ISSUANCE OF BONDS, SPECIAL BONDS BY VIETNAM ASSET MANAGEMENT COMPANY”
8. To supplement, amend Article 10 as follows:
“Article 10. Special bond issuer, purposes and principles of issuance of bonds, special bonds
1. The special bond, bond issuer is Asset Management Company, which shall authorize the State Bank’s Operation Center to organize the issuance of special bonds, bonds under this Circular.
2. Asset Management Company shall issue bonds, special bonds to pay non-performing loans for loan-selling credit institutions.
3. Bonds, special bonds are issued separately according to actual demands and special bond issuance plans stated in the plan of purchasing non-performing loans at the market price, the plan of issuing special bonds approved by the State Bank.
4. An issued special bond as stipulated under Clause 3 of this Article is equivalent to a purchased and sold nonperforming loan. In case a purchased and sold non-performing loan is a syndicated credit, Asset Management Company shall bonds, issue special bonds to every credit institution participating in the extension of the syndicated credit.”
9. To amend, supplement Article 11 as follows:
“Article 11. Conditions and terms of bonds, special bonds
1. Par value of bonds, special bonds
a) The par value of a bond equals the purchase price of such nonperforming loan. The par value of a special bond equals the purchase price, sale price of such nonperforming loan as provided in Clause 1, Article 14 of Decree No. 53/2013/ND-CP.
b) In case of purchasing and selling a non-performing loan being a syndicated credit, the par value of the special bond issued to each of credit institutions participating in the extension of such syndicated credit with the corresponding value as follows:
(i) The book value of the outstanding principal of such non-performing loan after deducting the unused risk provision amount already set aside for such nonperforming loan which is being monitored by such credit institution if Asset Management Company purchases nonperforming loans by special bonds.
(ii) Value of purchased nonperforming loan based on the contribution ratio of each credit institution participating in the extension of the syndicated credit if the Asset Management Company purchase nonperforming loan at the market price by bonds.
2. Bonds, special bonds are issued in VND. Bonds are transferred between State Bank and credit institutions and among credit institutions. Special bonds are not transferred.
3. Bonds, special bonds are issued in the form of book entry or electronic data containing identity information; the Asset Management Company shall decide the form of bonds, special bonds.
4. Interest rate of bonds, special bonds is 0%;
5. Term of bonds, special bonds:
a) Term of bonds shall be determined according to agreements between Asset Management Company and loan-selling credit institutions, at least 1 year. If recovered amounts are not enough to pay for bonds when the bond is due, Asset Management Company shall extend the term of bonds, 3 years at most excluding the cases that are approved by the bond-holders;
b) The maximum term of special bonds is 5 years; if special bonds are issued to purchase nonperforming loans of credit institutions that are performing restructuring plans or having financial difficulties, term of special bonds shall be no more than 10 years.
6. Bonds, special bonds must be deposited at the State Bank as stipulated by the State Bank on deposit of valuable papers and used in refinancing professions with the State Bank. Bonds are used to participate in open market operations as stipulated.
7. Bonds, special bonds are exempt from the depositing charge at the State Bank.
8. Credit institutions are not required to make the provision for bonds.
10. To amend, supplement Article 14 as follows:
“Article 14. Elements of bonds, special bonds
a) Name, address and serial number of the establishment decision and business registration number of Vietnam Asset Management Company;
b) Par value;
c) Interest rate;
d) Term;
dd) Date of issuance;
e) Information on organizations owning bonds, special bonds: name, address and serial number of the establishment decision and business registration number of the organization;
h) A special bond, bond which is issued in the form of certificate must contain the code and serial number of issuance, the signature of the lawful representative of Vietnam Asset Management Company, other signatures as provided by Vietnam Asset Management Company and be affixed with the seal of Vietnam Asset Management Company;
2. In addition to the contents specified in Clause 1 of this Article, Vietnam Asset Management Company may provide for other contents to be indicated on bonds, special bonds that must be lawful.”
11. To supplement, amend Article 15 as follows:
“Article 15. Responsibilities for management and use of bonds, special bonds
1. Rights and responsibilities of the Asset Management Company
a) To organize a system for managing and supervising issued bonds, special bonds;
b) To exercise the rights and perform the obligations related to bonds, special bonds;
c) To receive and pay bonds, special bonds in accordance with law.
d) To report to the State Bank on the issuance and payment of bonds, special bonds.
dd) To fully pay the par value of bonds for organizations owing bonds as stipulated under Clause 1 Article 44a of this Circular;
e) On behalf of credit institutions owing bonds to pay as stipulated under Point c Clause 1 Article 43a and Point c Clause 2 Article 44a of this Circular and regulations of State Bank on refinancing loans on the basis of bonds.
g) On behalf of loan-selling credit institutions to use collected amount of nonperforming loans purchased by special bonds that the loan-selling credit institution is beneficiary to pay refinancing loans on the basis of special bonds as stipulated under Point b Clause 1 Article 43 and Clause 3 Article 44 of this Circular and regulations of State Bank on refinancing loans on the basis of special bonds.
h) To extend terms of bonds as stipulated under Point a Clause 5 Article 11 of this Circular;
2. Rights and responsibilities of credit institutions owning bonds, special bonds
a) To exercise the rights and perform the obligations related to bonds, special bonds;
b) To transfer and pay for bonds, special bonds to Vietnam Asset Management Company in accordance with law;
c) To apply the risk coefficient of 0% for bonds and the risk coefficient of 20% for special bonds when calculating their capital adequacy ratio;
d) To use special bonds only for purchasing nonperforming loans sold Vietnam Asset Management Company under this Circular.
dd) To use bonds, special bonds for taking refinanced loans from the State Bank; To use bonds for participating open market operations;
e) Not be allowed to transfer bonds to other organizations, individuals excluding cases as stipulated under Clause 2 Article 11 of this Circular.”
12. To supplement Article 17a into Article 17 as follows:
“17a. Dossiers, orders, procedures of request for specific term of special bonds with term of over 5 years
1. Credit institutions performing restructuring plans according to the scheme, plans approved by competent agencies or having financial difficulties, when selling nonperforming loans to Asset Management Company, shall set up dossiers as stipulated under Clause 2 of this Article to request the State Bank for opinions on specific term of special bonds issued by Asset Management Company to credit institutions in that year.
2. Credit institutions prepare 01 set of dossier and send it directly or by post to the State Bank (Banking Inspection and Inspection) including:
a) An application on specific term of special bonds when selling nonperforming loans to Asset Management Company;
b) Report of credit institutions on terms of special bonds including the following contents:
(i) Financial status, operations, limits and prudential ratios in operations of credit institutions;
(ii) Nonperforming loan sold and expected to sell to Asset Management Company, risk provision formed for special bonds and estimated risk provision for special bonds corresponding with nonperforming loans expected to sell;
(iii) The plan on forming risk provision for special bonds in accordance with business plan of credit institutions;
(iv) Reasons, necessity of proposing specific term of special bonds;
(v) Impacts of selling nonperforming loans to Asset Management Company receiving special bonds on risk provision, financial status, ratios, safety margin of credit institutions if the term of special bonds is 5 years and specific term of special bonds are applied at the proposal;
(vi) Other contents at the request of State Bank;
3. Within 15 working days since the full receipt of valid documents as stipulated under Clause 2 of this Article, the State Bank shall consider and send specific terms of special bonds in writing to credit institutions on the request of credit institutions in the following orders:
a) Within 3 working days since the full receipt of valid dossier, Banking Inspection and Supervision Agency shall get opinions from the Department of Monetary Policy and Asset Management Company on the proposal of specific term of special bonds attached together with the dossier as stipulated under Clause 2 of this Article; Within 3 working days since the receipt of the written proposals from the Banking Inspection and Supervision Agency, the Department of Monetary Policy and Asset Management Company must give written replies to the Banking Inspection and Supervision Agency.
b) Within 3 working days since the full receipt of documents from the Department of Monetary Policy and Asset Management Company, the Banking Inspection and Supervision Agency shall submit to the State Bank Governor on specific term of special bonds on the basis of credit institutions’ proposals.
4. Based on documents of the State Bank, credit institutions and Asset Management Company shall purchase, sell nonperforming loans on specific terms as approved.”
13. To supplement, amend Clause 1 Article 23 as follows:
“Nonperforming loans shall be purchased at the market price by Asset Management Company when they fully meet the following conditions:
a) Nonperforming loan meets conditions as stipulated under Clause 1 Article 16 of this Circular;
b) The amount payable for the purchase of the loan is assessed as fully recoverable by Asset Management Company;
c) The loan’s collateral is saleable; The borrower shows prospect of repaying the loan or has a feasible loan repayment plan;
14. To supplement, amend Clause 2 Article 24 as follows:
“2. A plan on purchase of loans at market prices contains at least the following details:
a) Scope of non-performing loans to be purchased at market prices (classified based on groups of borrowers, sectors and types of collateral);
b) Total non-performing loans to be purchased, capital sources (cash, bonds, other sources) and financial conditions of Vietnam Asset Management Company for purchase of nonperforming loans at market prices;
c) A plan on the issuance of bonds to purchase nonperforming loans at market prices (if any);
d) Analyses and assessments of the effectiveness, risks and possibility to recover amounts paid for non-performing loans at market prices;
dd) Measures of selling and handling non-performing loans and collaterals
15. To supplement, amend Article 26 as follows:
“Article 26. Purchase of nonperforming loans at market prices
1. Based on the plan on purchase of loans at market prices approved by the State Bank, its financial capacity, economic efficiency and market situation, Vietnam Asset Management Company shall decide to purchase nonperforming loans at market prices and take responsibility for its decision.
2. Asset Management Company shall decide to purchase nonperforming loans at market prices and take responsibility for its decision after performing the following:
a) Assessing non-performing loans as satisfying the conditions specified in Clause 1, Article 24 of this Circular;
b) Determining the market value of non-performing loans, including collaterals thereof; c) Assessing economic efficiency, risks and possibility to recover amounts payable for the purchase of non-performing loans;
d) Analyzing and evaluating the actual state and prospect of non-performing loans, borrowers, guarantors, parties obliged to repay loans and loan purchase conditions and agreements with loan-selling credit institutions;
dd) Measures to be taken to handle non-performing loans and collaterals thereof;”
16. To supplement, amend Article 27 as follows:
“Article 27. Loan restructuring principles applicable to purchased nonperforming loans
1. The restructuring of non-performing loans must comply with Decree No. 53/2013/ND-CP, Decree No. 34/2015/ND-CP and this Circular, and in line with agreements in credit contracts, loan acknowledgment agreements, entrustment contracts, corporate bond purchase contracts and loan purchase and sale contracts.
2. Asset Management Company shall consider and restructure non-performing loans purchased at market prices at customer’s request in line with this Circular;
3. Organizations, individuals are prohibited to take advantage of loan restructuring;
4. Asset Management Company shall restructure nonperforming loans purchased by special bonds at customer’s request and in line with this Circular.”
17. To supplement, amend Article 28 as follows:
“Article 28. Adjustment of interest rates of purchased non-performing loans
1. Asset Management Company shall decide on adjusting the interest rates currently applied to purchased non-performing loans to reasonable levels in accordance with the law and market interest rates in each period.
2. Quarterly, Asset Management Company shall publicize the reasonable interest rates and the basis to determine this interest rate.
3. Vietnam Asset Management Company may consider reducing interest rates if non-performing loans and borrowers meet the following conditions:
a) Borrowers properly cooperate with Asset Management Company and authorized credit institutions on providing information and other matters related to the loan and collaterals;
b) Borrowers encounter temporary financial difficulties and the reduction of interest rates of non-performing loans may help them lessen their financial difficulties and restore production and business;
c) Non-performing loans do not violate Article 126, 127, 128 of the Law on Credit Institutions at the time of signing credit contracts.
4. After the purchase of nonperforming loans, Asset Management Company shall consider adjusting the interest rate of the loans on interest rates as specified under Clause 2 of this Article. Within 5 working days after adjusting the interest rate of a non-performing loan, Asset Management Company shall notify such to the loan-selling credit institution to (for non-performing loans purchased with special bonds), to customers for information and compliance.”
18. To supplement, amend Article 29 as follows:
“Article 29. Exemption from and reduction of overdue fine interests, charges and loan interests, charges and fines of purchase nonperforming loans
1. Vietnam Asset Management Company shall consider reducing or exempting overdue fine interests, charges and loan interests of purchased nonperforming loans when nonperforming loans and borrowers satisfy the following conditions:
a) They fully meet the conditions specified in Clause 3, Article 28 of this Circular;
b) Borrowers must have a repayment plan or financial restructuring plan;
2. In case of considering the exemption from or reduction of overdue fine, charges of loans purchased with special bonds, Asset Management Company shall consult loan-selling credit institutions before making decision.
Within 10 working days after receiving Asset Management Company’s request, loan-selling credit institutions shall give written replies on consulted matters to Asset Management Company. After that time, Asset Management Company shall decide and take responsible for the exemption from or reduction of overdue interest, fine and charges.
3. Within 5 working days after making decision to exempt or reduce overdue interest, fines and charges, Asset Management Company shall notify such to the loan-selling credit institution (for non-performing loans purchased with special bonds), the borrowers for information and compliance.
19. To amend, supplement Article 30 as follows:
“Article 30. Methods of restructuring loan repayment terms
1. Asset Management Company shall consider restructuring loan repayment terms in the form of loan rescheduling or loan extension when borrowers meet the following conditions:
a) Borrowers have feasible loan repayment plans;
b) Borrowers are incapable of repaying loan principals and/or interests within the loan repayment term agreed in credit contracts, entrustment contracts or corporate bond purchase contracts and are appraised by Asset Management Company as capable of repaying loans in the subsequent periods after having the loan repayment terms rescheduled;
c) Borrowers are incapable of fully repaying loan principals and/or interests within the loan repayment term agreed in credit contracts, entrustment contracts or corporate bond purchase contracts and are appraised by Asset Management Company as capable of fully repaying loans within a certain period of time after the agreed loan repayment term, in case of loan extension;
d) The extended duration must not exceed the remaining term of the corresponding special bonds. For loan extension of nonperforming loans exceeding the remaining term of the corresponding special bonds, Asset Management Company shall agree with loan-selling credit institutions in writing on the extension time that exceeds the remaining time of the corresponding special bonds.
2. In case of considering the restructuring of repayment terms of loans purchased with special bonds, Asset Management Company shall consult loan-selling credit institutions before making decision.
Within 10 working days after receiving Asset Management Company’s request, loan-selling credit institutions shall give written replies on consulted matters to Asset Management Company. After that time, Asset Management Company shall decide and take responsible for restructuring the repayment term.
3. Within 5 working days after restructuring loan repayment terms, Asset Management Company shall notify such to loan-selling credit institutions (for non-performing loans purchased with special bonds), borrowers for information and compliance;
20. To supplement, amend Article 34 as follows:
“Article 34. Asset Management Company’s sale of purchased nonperforming loans
1. Asset Management Company shall sell nonperforming loans according to the following principles:
a) Complying with the law;
b) Assuring publicity and transparency;
c) Recovering loans, including interest, charges (if any);
d) Prohibiting organizations, individuals to take advantage of the sale of nonperforming loans for illegal benefits;
dd) The sale price of a non-performing loan is the most reasonable price compared to prices offered for that loan or prices of non-performing loans of equivalent quality, or the value of the loan determined by Asset Management Company or a licensed independent valuation organization in order to reduce loss in the handling of non-performing loans.
e) Asset Management Company shall sell purchased nonperforming loans in the form of auction or competitive bidding. In case of auction or competitive offering, there is at least one unsuccessful time, Asset Management Company shall directly agree with the purchaser, including the purchaser participating the auction or applying for competitive offering and selling loans to the purchaser who pays the highest price.
2. The auction shall be implemented according to this Circular and other regulations on auction of Asset Management Company.
3. For the sale of nonperforming loan in the form of competitive offering, there must be the participation of at least 2 purchasers other than related purchasers as prescribed by law and shall be implemented as follows:
a) Asset Management Company shall estimate the price or hire an organization to estimate independently to determine the offering price of nonperforming loans.
b) Asset Management Company shall publish information on selling nonperforming loans in the form of competitive offering on the website of the State Bank, Asset Management Company, loan-selling credit institutions (for nonperforming loans purchased by special bonds). Asset Management Company shall decide the contents of information assuring publicity and transparency, of which includes detailed information on nonperforming loans, collaterals, offering price, location, time and references;
The deadline for publishing information and legal documents is no later than 5 working days for nonperforming loans whose collaterals are assets and is no later than 15 working days for nonperforming loans whose collaterals are real estate. Submission of price offering document shall be implemented right after information and legal documents are published and is no later than 3 working days.
c) Within 3 working days since the deadline of submitting the price offering dossier, Asset Management Company shall sell nonperforming loans to the purchaser who pays the highest price. If there are 2 purchasers that pay at the same highest price, Asset Management Company shall have purchasers draw.
d) The sale of nonperforming loans in the form of competitive offering is considered as being unsuccessful in the following cases:
(i) There are fewer than 2 purchasers submitting price offering dossier;
(ii) The highest price is lower than the offering price of Asset Management Company;
dd) Asset Management Company shall build and promulgate documents guiding on orders, procedures, dossier for selling nonperforming loans in the form of competitive offering;
4. The sale of a non-performing loan must be made under a written contract.
5. Vietnam Asset Management Company may authorize credit institutions to sell non-performing loans according to its requirements and conditions and regulations under this Circular;
21. To supplement, amend Clause 1 Article 35 as follows:
“1. Asset Management Company may reach agreement with loan-selling credit institutions on forms in accordance with Point e Clause 1 Article 34 of this Circular and conditions for selling non-performing loans (including the reserve price in the case of auction or offering price in case of competitive offering or the sale price in case of direct agreement with loan purchasers) excluding cases as stipulated under Clause 3 of this Article. If Asset Management Company and loan-selling credit institutions can’t reach agreement on forms, conditions for non-performing loans, Asset Management Company shall organize an auction as stipulated under Clause 2 Article 34 of this Article.”
22. To supplement, amend Chapter IV as follows:
“Chapter IV
HANDLING OF RECOVERED LOAN AMOUNTS, PAYMENT OF
BONDS, SPECIAL BONDS AND RE-PURCHASE OF NON-PERFORMING
LOANS
23. To supplement, amend Article 42 as follows:
“Article 42. Order of priority for payment of non-performing loans purchased
24. To supplement, amend Point a Clause 1 Article 43 as follows:
“a) If loan-selling credit institutions do not take refinanced loans based on special bonds, within 5 working days since the day of arising recovered loan amounts, Asset Management Company shall deposit the recovered loan amounts at loan-selling credit institutions in the form of non-interest deposit and may not withdraw them before the time of payment of special bonds except the case provided in Article 19 of this Circular.
25. To supplement, amend Article 43a into Article 43 as follows:
“Article 43a. Handling of recovered amounts of non-performing loans purchased with bonds at market prices
1. When arising amounts and assets recovered from non-performing loans purchased at market prices, Asset Management Company shall handle amounts corresponding with amounts, assets recovered from non-performing loans purchased at market prices as follows:
a) If the organizations owing bonds is State Bank, Asset Management Company, it shall be implemented according to guidelines of the State Bank;
b) If credit institutions owing bonds do not take refinanced loans based on bonds issued to purchase that nonperforming loan, with 5 working days since recovered amounts, assets are arisen, Asset Management Company shall deposit those amounts at credit institutions owing bonds in the form of non-interest deposit and may not withdraw them before the time of payment of bonds;
c) If credit institutions owing bonds take refinanced loans based on bonds, within the first 5 working days of the following quarter, Asset Management Company shall use mounts corresponding with recovered loan amounts in the quarter to repay refinanced loans based on those bonds and deduct these amounts from the total amount payable by Asset Management Company to credit institutions upon payment of bonds.
2. When recovered amounts, assets are not lower than the par value of bonds, Asset Management Company and bondholders shall pay bonds as stipulated as stipulated under Article 44a of this Circular.”
26. To supplement, amend Clause 2 Article 44 as follows:
“2. Within 5 working days after special bonds become mature under Clause 1 of this Article, a loan-selling credit institution shall fully repay the refinanced loan on the basis of corresponding special bonds (if any), have special bonds unblocked by the State Bank (Operation Center) under regulations, and coordinate with Vietnam Asset Management Company in paying special bonds as follows:
a) In case the non-performing loan has not been fully recovered (including principal, interest and other financial obligations) in the credit contract, authorization contract and bond contract, the loan-selling credit institution shall repurchase the non-performing loan from Asset Management Company at the book value of the outstanding principal loan recorded in books of Asset Management Company, and contributed capital amount or share capital amount at the borrower in case part of the nonperforming loan is converted into the charter capital or share capital of the borrower (if any); receive the portion of the recovered loan amount which it is entitled to under Point b, Clause 2, Article 43 of this Circular (if any) from Vietnam Asset Management Company (if any);
b) If the non-performing loan has been fully recovered (including principal, interest and other financial obligations) in the credit contract, entrusted contract and bond contract (even in case the whole non -performing loan has been sold to an organization or individual), the loan-selling credit institution shall repurchase the contributed capital amount or share capital amount at the borrower at the book value recorded in balance sheet of Asset Management Company for cases that a part of the non-performing loan is converted into charter capital or share capital of the borrower (if any); receive the recovered loan amount which it is entitled to under Point b, Clause 2, Article 43 of this Circular from Asset Management Company;
c) In case the whole non-performing loan is converted into charter capital or share capital of the borrower being an enterprise, the loan-selling credit institution shall use corresponding special bonds to repurchase the contributed capital amount or share capital amount at the borrower at the book value recorded in balance sheet of Asset Management Company and concurrently pay the portion of the recovered loan amount provided at Point a, Clause 2, Article 43 of this Circular to Vietnam Asset Management Company.”
27. To supplement, amend Article 44a into Article 44 as follows:
“Article 44a. Payment of bonds
1. Bonds become mature in the following cases:
a) The recovered amounts is not lower than the par value of bonds;
b) Asset Management Company sells the non-performing loan, converts the whole purchased non performing loan into charter capital or share capital;
c) Asset Management Company has fully paid the par value of bonds;
d) Bonds become mature;
2. Within 5 working days after bonds become mature under Clause 1 of this Article,Asset Management Company shall fully pay bonds as follows:
a) If the bondholder is the State Bank, Asset Management, it shall be implemented according the guidelines of the State Bank;
b) If the bondholder is the credit institution and not borrowing refinanced capital on the basis of bonds, Asset Management Company shall pay the amount that is equal to the par value of bonds to credit institutions owning bonds and credit institutions owning bonds that return bonds to Asset Management Company;
c) If the bondholder is the credit institutions and borrowing refinanced capital on the basis of bonds, Asset Management Company shall be on behalf of credit institutions to borrow refinanced capital on the basis of those bonds, the remaining amount (if any) Asset Management Company shall pay for credit institutions owning bonds; Asset Management Company shall receive bonds from the State Bank. If the amount receiving from payment of bonds is not enough to repay refinanced loan on the basis of those bonds, credit institutions shall pay the shortage of refinanced loan as stipulated by the State Bank on refinancing on the basis of bonds to purchase the loan at market prices of Asset Management Company.”
28. To supplement, amend Clause 2 Article 46 as follows:
“2. Annually, within 5 working days preceding the date of maturity of bonds, a loan-selling credit institution shall set aside a minimum provision amount specific to each special bond according to the following formula:
Of which,
Xmis the minimum amount of risk provision that must be formed for special bonds in the mthyear;
Xm-1is the specific amount of risk provision formed for special bonds accumulated to the end of year m-1;
Y is the par value of special bonds;
n is the term of special bonds (year);
m is the number of years since the special bond is issued until risk provision is formed;
Zmis the recovered amount of nonperforming loan accumulated until risk provision is formed (year m). Loan-selling credit institutions shall coordinate with Asset Management Company to determine those recovered amounts.
If (Zm+ Xm-1) ≥ (
* m), specific amount of risk provisions (X(m)shall be 0.”
29. To supplement Clause 2a, 2b into Article 46 as follows:
“2a. Loan-selling credit institutions shall decide annual amount of risk provision for each special bond in each provision period, within 5 working days before due date of special bond, loan-selling credit institutions must form specific minimum amount of risk provision for each special bond that is calculated according to the form as stipulated under Clause 2 of this Article.
2b. Credit institutions implementing restructuring measures or having financial difficulties that are incapable of forming annual risk provisions for special bonds as stipulated under Clause 2 of this Article shall report to the State Bank for consideration and settlement to ensure that credit institutions have enough sources of provisions to handle with nonperforming loans after payment of special bonds with Asset Management Company.”
30. To supplement, amend Clause 5 Article 46 as follows:
“5. A loan-selling credit institution shall re-convert into other incomes the remaining amount of risk provisions for special bonds after handling risks under Clause 4 of this Article or enter to the account the shortage into expenditure in case the risk provision amount for special bonds is not enough for handling risks under Clause 4 of this Article.
31. To supplement Clause 8 into Article 46 as follows:
“8. Dossier of handling risks when using risk provisions for special bonds to handle risks for nonperforming loans after being repurchased from Asset Management Company by loan-selling credit institutions includes:
a) Dossier, documents on the purchase, sale of nonperforming loans between loan-selling credit institutions and Asset Management Company;
b) Documents related restructuring of the loan, converting the loan into contributed capital, share capital;
c) Documents proving collection of the loan for nonperforming loans after being sold to Asset Management Company;
d) Documents proving the risk provision amounts formed for special bonds corresponding with nonperforming loans sold to Asset Management Company;
dd) Decision or approval of the Board of handling risks of credit institutions;
e) Purchase, sale contract of nonperforming loan between Asset Management Company and loan-selling credit institutions when paying special bonds;
g) Other documents;
32. To supplement, amend Article 47 as follows:
“Article 47. Principles of risk provision formation and use of risk provisions for handling risks for non-performing loans purchased at market prices
1. Board of Members of the Asset Management Company shall decide and take responsible for risk provision formation and use risk provisions to handle risks for special bonds in accordance with internal regulations on formation and use of risk provisions for handling risks for non-performing loans purchased at market prices as stipulated under this Circular and other related regulations.
2. After handling risks, Asset Management Company shall record into off balance sheet the outstanding principal that need recovering and supervise, use all measures to recover the loan as stipulated. The use of risk provision is internal task of Asset Management Company and it does not change obligations of paying the loan of customers for the loan after being handled with risks;
3. After 5 years since risk provision is used to handle risks and after measures of recovering the loan is used but fails to recover, Asset Management Company shall decide on cancellation of the loan that has been handled with risks out of the off balance sheet after being approved in writing by the Ministry of Finance and the State Bank.
4. The amount collected from the loan that has been handled with risks shall be recorded into revenue in the period of Asset Management Company.”
33. To supplement Article 47a after Article 47 as follows:
“47a. Formation of risk provision for each nonperforming loan purchased at market prices according to the following formula:
R=(A-C)*r
Of which,
a) A is the book value of the principal of nonperforming loans recorded at Asset Management Company’s book on every fifteenth of December; C is the deduction value of collaterals; r is the rate of risk provision decided by the Board of Members but not lower than 5%.
b) If C > A, R shall be calculated at 0.
c) If one collateral is used for many nonperforming loans, Asset Management Company shall determine the value rate of that collateral for each nonperforming loan; C is calculated as the deduction value of collateral multiplied by value of collateral of that nonperforming loan.
2. Annually, no later than December 15th, Asset Management Company shall estimate value of the collateral for each loan, determine the risk provision amounts that need to be formed for each loan as stipulated under Clause 1 of this Article:
a) If the risk provision amount must be formed for the year is lower than the formed risk provision amount, Asset Management Company shall be reversed the difference;
b) If the risk provision amount must be formed for the year is higher than the formed risk provision amount, Asset Management Company shall supplement the difference;
3. Collaterals to calculate risk provision amounts as stipulated under Clause 1 of this Article must meet the following conditions:
a) Asset Management Company has rights to handle with collaterals according to guarantee contract and regulations stipulated by the law when customers fail to perform their obligations according to commitment.
b) Collaterals must fully meet conditions as stipulated by regulations on guarantee transactions;
c) Collaterals with value of more than 200 billion dong must be estimated by competent cost estimation agencies as stipulated. If the competent cost estimation agency is incapable of estimating or there is no organization functioned as a competent cost estimation agency to estimate those collaterals, Asset Management Company shall estimate according to its internal regulations;
If the collateral fails to meet conditions as stipulated under Point a, b and c of this Clause, the deduction value of the collateral shall be calculated at 0.
4. The deduction value of the collateral shall be determined be the multiplication of the value of the collateral as stipulated under Clause 5 of this Article and the deduction value for each kind of collateral as stipulated under Clause 6 of this Article.
Asset Management Company shall determine the deduction rate for each kind of collateral based on the judgment on the recoverable rate but it must not exceed the maximum deduction rate for each kind of collateral as stipulated under Clause 6 of this Article.
5. Value of the collateral shall be determined as follows:
a) Gold bar: the purchase price at the head office of the enterprise, credit institutions owning gold bar at the end of day before the day that risk provision is formed. If the purchase price is not posted, value of gold bar shall be determined as stipulated under Point d of this Clause;
b) Government bonds are listed on the stock-exchange securities:
Reference price at the stock exchange securities at the end of day before the day that specific risk provision is formed or at the nearest time before the day that risk provision is formed (if there is no reference price at the end of day before the day that specific risk provision is formed. Government bonds that are not listed on the stock exchange securities shall be calculated at its par value;
c) Securities issued by enterprises (including credit institutions) shall be listed on the stock exchange securities: reference price at the stock exchange securities at the end of day before the day that specific risk provision is formed or at the nearest time before the day that specific risk provision is formed (if there is no reference price at the end of day before the day that specific risk provision is formed. Securities that are not listed on the stock exchange securities, other valuable papers issued by enterprises (including credit institutions) shall be calculated at its par value;
d) Assets, real estate and other collaterals: if assets are stipulated under Point c Clause 3 of this Article, value of collaterals shall be determined according to Point c Clause 3 of this Article. For remaining cases, value of collaterals shall be estimated according to internal regulations of Asset Management Company. If there is no documents on estimation of collaterals, value of collaterals shall be calculated at 0.
dd) Assets for financial leasing: the remaining leasing amount (value of assets for financial leasing in the financial leasing contract minus amount paid) in the contract at the time of specific risk provision formation or value estimated by competent estimation agencies as stipulated by the law.
6. The maximum deduction value for collaterals:
a) Deposit of customers in Vietnam dong: 100%;
b) Gold bar, excluding gold bar as stipulated under Point i of this Clause; deposit of customers in foreign currency: 95%;
c) Government bonds, savings, deposit certificate, promissory note, treasury bill issued by credit institutions;
- Remaining term under 1 year: 95%;
- Remaining term from 1 year to 5 year: 85%;
- Remaining term over 5 years: 80%;
d) Securities issued by credit institutions are listed on the stock exchange securities: 70%;
dd) Securities issued by other enterprises are listed on the stock exchange securities: 65%;
e) Securities that are not listed on the stock exchange securities, valuable papers, excluding clauses as stipulated under Point c of this Clause issued by credit institutions that register to list securities on the stock exchange securities: 50%;
Securities are not listed on the stock exchange securities, valuable papers, excluding clauses as stipulated under Point c of this Clause issued by credit institutions that don’t register to list securities on the stock exchange securities: 30%;
g) Securities that are not listed on the stock exchange securities, valuable papers issued by enterprises that register to list securities on the stock exchange securities: 30%;
Securities that are not listed on the stock exchange securities, valuable papers issued by enterprises that don’t register to list securities on the stock exchange securities: 10%;
h) Real estate: 50%;
i) Gold bar with no listed price, other kinds of gold and other kinds of collaterals: 30%;
34. To supplement, amend Article 47b after Article 47c as follows:
“47b. Use of risk provisions for handling risks for non-performing loans purchased at market prices
1. Asset Management Company shall use risk provisions for handling risks in the following cases:
a) Value of loans sold by Asset Management Company is lower than the book value of the outstanding principal recorded at Asset Management Company’s book at the time of handling risks or,
b) Customers being organizations are bankrupted, declared to be dissolved; Customers being individuals are dead, declared to be lost.
2. Dossiers for handling risks include:
a) Documents on loan purchase, loan-restructuring, sale of loans for loans being handled with risks;
b) Documents of collaterals and other papers;
c) Decision or approval of Board of Members on risk provision for handling risks;
d) Decision or approval of Board of Members on use of risk provisions for handling risks;
dd) For customers being organizations that are bankrupted, in addition to documents as specified under Point a, b, c and d of this Clause, certified copies of Decision on bankruptcy or Decision on dissolution by the Court as stipulated by the law are required;
e) For customers being individuals are dead, declared to be lost, in addition to documents as specified under Point a, b, c and d, certified copies of death certificate or decision on declaring to be lost as stipulated by the law;
g) Other documents;
3. Use of risk provisions for handling risks:
a) Asset Management Company shall be only entitled to use risk provisions for handling risks for loans that fully meet regulations as stipulated under Clause 1, 2 of this Article.
b) Asset Management Company shall use risk provisions for handling:
(i) The difference between the sale price and book value of the outstanding principal of the loan recorded at Asset Management Company’s book at the time of handling risks for cases as stipulated under Point a Clause 1 of this Article, or;
(ii) Book value of the outstanding principal of the loan at the time of handling risks for cases as stipulated under Point b Clause 1 of this Article;
c) Asset Management Company shall enter to the account for the remaining amount of provision after handling risks as stipulated under Point b of this Clause. If the remaining amount of the provision is not enough to handle as stipulated under Point b of this Clause, Asset Management Company shall post to the account the shortage in the period.”
35. To supplement, amend Article 37c after Article 37b as follows:
“47c. Accounting record and report on formation, use of risk provisions for handling risks for nonperforming loans purchased at market prices
1. Asset Management Company shall enter to the account the risk provisions formed, used (including reversal of provision in the case of forming risk provision but not using) as stipulated by the law.
2. Asset Management Company shall report results on formation and use of risk provisions for handling risks as stipulated under regulations on reporting regime applied for Asset Management Company promulgated by the State Bank and at the State Bank’s request;
36. To supplement Clause 7 and Clause 8 into Article 49 as follows: \
“7. To coordinate with loan-selling credit institutions to promptly provide information on nonperforming loans to the State Bank (the State Bank Operations Center) when requesting issuance, refinance, payment of bonds, special bonds.
8. To sue customers, parties that have obligations to pay the loan, guarantee at the court in the time of suing as stipulated by the law.”
37. To supplement, amend Point b Clause 4 Article 50 as follows:
“b. Use specific risk provisions for non-performing loans to handle the difference between the book value of outstanding principal loans and sale prices of those non-performing loans upon sale of non-performing loans to Asset Management Company. The dossier for handling risks includes:
(i) Dossier, documents proving risk provision for each specific nonperforming loan sold to Asset Management Company that has not been used yet;
(ii) Decision or approval of the Board of handling risks of credit institutions on handling risks;
(iii) Purchase, sale contract of nonperforming loan between Asset Management Company and credit institution;”
38. To supplement Point 7 into Clause 4 Article 50 as follows:
“If credit institutions purchase nonperforming loans at market prices or repurchase nonperforming loans as stipulated under Clause 3 Article 35 of this Circular from Asset Management Company, credit institutions shall classify amounts paid for the purchase of nonperforming loans into a group at a risk level not lower than that of the group of those loans are classified before being sold to Asset Management Company.”
Article 2. Effect
1. This Circular takes effect on October 15, 2015.
2. For special bonds paid before the effective day of this Circular that nonperforming loans have not been fully recovered (including principal, interest and other financial obligations) mentioned in the credit contract, authorization contract, bond purchase contract, Asset Management Company and loan-selling credit institutions shall implement according to Point a Clause 2 Article 44 of this Circular.
Article 3. Organization of implementation
The Chief of the Office, the Chief of the Banking Supervision Agency, heads of units of the State Bank, directors of provincial-level State Bank branches, chairpersons of the Boards of Directors and Members’ Councils and general directors (directors) of Vietnamese credit institutions; the chairperson of the Members’ Council and general director of Vietnam Asset Management Company and related organizations and persons shall implement this Circular.
For the State Bank Governor
Deputy Governor
Nguyen Phuoc Thanh
Vietnamese
Circular 14/2015/TT-NHNN DOC (Word)
Circular 14/2015/TT-NHNN PDF (Original)
