IFC and Welcome Financial Group (WFG) on Thursday launched a US$60 million platform to address non-performing loans (NPLs) and enhance access to finance in Việt Nam. This initiative will help defaulted borrowers rebuild creditworthiness.

 

Managed by WFG's subsidiary, Welcome Debt Trading Company Limited (WDT), the facility will acquire and resolve NPLs from local financial institutions.

 

High NPL levels have strained the Vietnamese banking sector due to global crises and the lingering effects of COVID-19. The platform aims to offload up to $1.2 billion in NPLs, enabling up to 400,000 debtors to regain formal credit access.

 

WFG, with 20 years of NPL experience in South Korea, entered the Vietnamese market three years ago and has since acquired VNĐ2 trillion ($80 million) of NPLs.

 

"Through this co-investment, we will be able to provide better services to more customers by adding IFC's global management capabilities to our group's know-how," said Son Jongjoo, Chairman of WFG.

 

IFC’s investment, in collaboration with the Swiss State Secretariat for Economic Affairs (SECO), supports developing a robust NPL market in Việt Nam. This effort includes improving the legal framework for NPL resolution and debt trading, adopting best practices, and building market capacity. Addressing NPLs is crucial for fostering a resilient banking sector, encouraging investment, and spurring economic growth.

 

Access to finance is vital for emerging markets. Resolving NPLs will inject much-needed liquidity into Việt Nam's NPL market, enabling financial institutions to resume lending and restoring creditworthiness, said Thomas Jacobs, IFC Country Manager for Việt Nam, Cambodia, and Lao PDR.

 

This initiative is part of IFC's Distressed Asset Recovery Programme (DARP), which has committed or mobilised $9.1 billion globally by March 2024. — VNS

 

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