Banks face scrutiny

State banks may soon be forced to publically disclose how their finances stack up

Kieu Huu Dung, director of the bank’s non-credit institutions department, said the proposal asks all five state-owned commercial banks [SOCBs] to make public their annual financial reports beginning this year.
The move aims to speed up banking reform at SOCBs and to put them on a par with joint stock commercial banks, which have been posting their reports for two years.
“The move will create transparency in the whole banking system,” said Dung.
The central bank said in the proposal that once Vietnam has applied international accounting and debt classification standards for a year, financial figures at SOCBs would satisfy both local and international investors’ standards for transparency and prepare them to make their information public.
The average rate of bad debt at SOCBs was reported by SBV to be 7.7 per cent in 2005, and the average capital adequacy ratio, 4.5 per cent. The government also marked VND12 trillion ($754.7 million) for increasing chartered capital at SOCBs.
“The financial status of SOCBs is quite good to post in public and it is a reasonable step for speeding up the reform process, focusing on increasing competition, equity and equitisation for international integration,” said Dung.
Decision No 1407, requiring joint stock banks to make public their financial information, was a boon to both local and international investors, giving them the tools they need to supervise joint stock commercial banks’ operations and help those banks improve management.
If the proposal is passed, the central bank will regulate details of the publication. SOCB presidents and general managers would take responsibility for the accuracy of the information, which will be posted on each bank’s website, in its publications and in documents sent to management agencies and media outlets. The deadline for publication would be 120 days prior to the end of fiscal year.
Tran Bac Ha, general manager of the Bank for Investment and Development of Vietnam (BIDV), said his organisation has plans to hire an international auditing agency, the first to do so, to prepare for restructuring.




No. 755/April 3-9, 2006