Vietnam's bad-debt company decree: special bonds for local lenders, market value for foreign ones

Facts

Decree: Decree 359/2026/ND-CP, issued on 17 September 2026 and effective from 6 November 2026, governs the establishment, organisation, operation and financial mechanism of the Asset Management Company of Vietnamese credit institutions. The company is a single-member limited liability company wholly owned by the State, with charter capital of VND 5 trillion (about USD 190 million) ¹ (Article 8), under SBV supervision. Source: decree text; VietnamPlus.

Functions: the company buys non-performing loans from credit institutions and foreign bank branches, recovers and disposes of debts and collateral, and restructures loans. It operates on a cost-recovery rather than profit-seeking basis. Bad debts bought with special bonds may later be converted into purchases at market value. Source: VietnamPlus; decree text.

Pricing: Vietnamese credit institutions sell bad debts for special bonds at book value, meaning the outstanding principal less specific provisions made but not yet used (Article 13.1); joint-venture and foreign-owned credit institutions and foreign bank branches sell at market value (Article 13.2). A Vietnamese credit institution with an NPL ratio of 3% ² or more, or another ratio set by the SBV Governor, that does not sell bad debts to the company may be subject to SBV measures: an inspection or an independent audit and valuation of its assets and capital, followed by the sale of bad debts to the company, provisioning, prudential compliance and restructuring under an SBV-approved plan (Article 13.3). Source: decree text.

Borrowers: individuals whose debts are transferred to the company may still obtain new credit from lenders if they present viable production, business or investment plans and the lender agrees. Source: VietnamPlus; decree text (Article 6).

Analysis

Over time, the trigger matters because the system-level picture is mixed. Vietnam's listed banks reported an aggregate NPL ratio of 2.01% ³ at end-June, below the 3% trigger, but the aggregate hides lenders well above it, such as Sacombank at 7.54% ⁴. The rule therefore pushes the weakest lenders, rather than the system as a whole, toward the state company.

Across the Mekong, the approaches differ. Thailand's banks carry an NPL ratio of 2.82% ⁵ and resolve bad debts through asset management companies, including joint ventures with banks, and direct loan sales. Cambodia's banking-sector NPL ratio reached 9.6% ⁶ at end-June 2026 without a comparable state bad-debt vehicle. Book-value purchases for special bonds move bad loans off balance sheets without forcing an immediate loss, but the bonds keep the credit risk with the selling bank until the debts are recovered.

Implications

Counterpoints and uncertainties

The decree text and media summaries do not say how much bad debt the company is expected to buy, and its charter capital of VND 5 trillion (about USD 190 million) is small relative to bank balance sheets, so the volume of transactions will depend on implementing rules and special-bond use. The decree does not explicitly exclude retail loans, but small unsecured consumer loans with little collateral may be hard to price and resolve through this channel.