Recently, the Vietnamese banking sector has once again drawn attention. The state-owned Vietcombank announced that it would lower the auction prices of 10 land plots on Phu Quoc Island in an effort to recover loans from borrowers. This decision reflects the challenges currently faced by Vietnam’s real estate market and banking sector.

According to reports, Vietcombank has reduced the auction prices of these 10 land plots from nearly 30 billion Vietnamese dong to 26 billion Vietnamese dong, a decrease of 14%. This new auction price is equivalent to over 1 million US dollars. These plots, located on Phu Quoc Island, have a total area of over 1,400 square meters and are registered under the same individual. The auction is scheduled to take place on November 7, 2024, in Rach Gia town.

In the adjusted auction prices, the highest starting price is 4.4 billion Vietnamese dong, down 800 million Vietnamese dong from the previous price. The lowest starting price is 2.1 billion Vietnamese dong, a decrease of nearly 13%. It’s worth noting that bidders participating in the auction need to pay 10% of the starting auction price as a deposit.

This is not the first time Vietcombank has auctioned this borrower’s assets to recover debt. As early as July 2022, the bank sold 8 plots of land in Duong Dong town, Phu Quoc Island, for over 25.3 billion Vietnamese dong. This repeated auction behavior highlights the ongoing pressure banks face in recovering loans.

In fact, the Vietnamese banking industry generally faces difficulties in finding buyers for collateral assets. These assets typically include land, villas, and houses. According to statistics, real estate accounts for 70% of all mortgage loan assets, making it the most likely type of asset banks use for auctions to recover debts.

This phenomenon is closely related to the larger economic challenges Vietnam is currently facing. Vietnam is struggling with the problem of non-performing loans, which poses a serious threat to its banking system. According to the financial statements of nearly 30 banks, as of the end of June 2024, the total bad debt of these banks exceeded 271.5 trillion Vietnamese dong, a sharp increase of nearly 21% compared to the end of 2023. This data highlights the severe situation faced by the Vietnamese banking industry.

Moreover, the Asian Development Bank has issued a warning about Vietnam’s financial market. The institution points out that violations in corporate bond issuance and the real estate market may pose potential risks to the banking system. This warning further emphasizes the complex situation facing Vietnam’s financial market.

Summary of key points:

• Vietcombank lowers the auction prices of 10 land plots on Phu Quoc Island by 14% to recover borrower loans.
• These plots have a total area of over 1,400 square meters, with a new auction price of 26 billion Vietnamese dong.
• The auction will be held on November 7, 2024, in Rach Gia town, with bidders required to pay a deposit of 10% of the starting price.
• This is not the first time Vietcombank has auctioned this borrower’s assets, having conducted a similar operation in 2022.
• The Vietnamese banking industry generally faces difficulties in finding buyers for collateral assets, with real estate accounting for 70% of mortgage loan assets.
• Vietnam is facing a non-performing loan problem, with the total bad debt of nearly 30 banks exceeding 271.5 trillion Vietnamese dong as of the end of June 2024.
• The Asian Development Bank warns that violations in corporate bond issuance and the real estate market may pose risks to the banking system.