IFC, Welcome Financial Group to tackle non-performing loans in Vietnam

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 US$1.2 billion in NPLs, enabling up to 400,000 debtors to regain formal credit access.

WFG, with 20 years of NPL experience in the Republic of Korea, entered the Vietnamese market three years ago and has since acquired VND2 trillion (US$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 Vietnam. 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 Vietnam's NPL market, enabling financial institutions to resume lending and restoring creditworthiness, said Thomas Jacobs, IFC Country Manager for Vietnam, Cambodia, and Laos.

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