In International Shipping News 14/04/2015
Many banks cannot collect debts from shipping firms, which have been taking losses for several years.
In September 2014, Maritime Bank received a dispatch from Dong Do Maritime JSC (DDM) which said that DDM would give Dong Mai container ship to Maritime Bank as payment for the debt.
The procedures on ownership transfer were fulfilled after a short time. Maritime Bank has taken over the ship and put it into operation to earn money to cover the debt.
A DDM report released in mid-April 2014 showed that the book value of the ships was very high – VND228 billion, or $10.8 million, for Dong Mai and VND240 billion, or $11.4 million, for Dong Du ships. However, DDM admitted that the market prices of the ships were much lower.
Maritime Bank is not alone. A series of banks have reported huge non-performing loans from the credit contracts with shipping firms. Meanwhile, not many banks have accepted taking over borrowers’ old ships as payment for the debts.
In early February 2015, the Vietnam National Shipping Lines (Vinalines) announced a deal transferring 12.6 million VOS shares to ACB Bank as payment of debt.
The transactions would be made from March 19 to April 10 at the share price of VND10,000 per share, much higher than the VOS market price of VND5,300 per share.
As for VietinBank, another big creditor, Vinalines has decided to exchange ports’ shares for debt clearance. SBV has agreed to allow VietinBank to become the strategic shareholder of the ports belonging to Vinalines.
In a document released earlier this year, Vinalines said it still owed VND5 trillion to VietinBank.
The analyst noted that shipping firms have benefited from the banks’ debt restructuring plans. The debt settlement, plus the contractionary policy and the sale of old ships, all have helped many of them recover from difficulties.
Vosco, by the end of 2014, still owed VND2.8 trillion to banks. It also had a bad business performance in 2014. However, the sale of the old ships saved the firm, bringing profits of VND71 billion in the year.
Nevertheless, the non-performing loan burden on bankers remains very heavy. Most shipping firms have debts higher by two or three times than the firms’ stockholder equities.
VST’s report showed that its short-term loans had decreased by VND100 billion by the end of 2014, but it still owes VND200 billion to Agribank, ACB, Maritime Bank and Vietcombank. Meanwhile, its long-term debt had reached VND1.84 trillion by that time.
