Chief Justice calls for action to reduce number of banks in Vietnam

June 07, 2023 | 13:57
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Vietnam’s Chief Justice Le Minh Tri has highlighted the need for proactive measures to tackle non-performing loans and collateral assets, noting the importance of reducing the number of commercial banks in Vietnam to prevent unhealthy competition.
Chief Justice calls for action to reduce number of banks in Vietnam

Le Minh Tri, Chief Justice of the Supreme People's Procuracy and representative of the Ho Chi Minh City delegation, noted at the National Assembly session on June 6 that proactive measures must be taken to prevent and address non-performing loans and collateral assets in order to minimise delays in their resolution.

Moreover, Tri voiced his apprehension regarding the adverse consequences of an excessive proliferation of commercial banks, emphasising the risk of fostering unhealthy competition within the sector.

“No other country has as many commercial banks as Vietnam. Therefore, it is essential to reduce the number if their presence does not significantly contribute to socioeconomic development,” he said.

He also recommended strengthening inspections and audits to ensure that the function of lending aligns with the true nature of a credit institution.

Tri also referred to a government's decision, which specifically calls for a review, study, amendment, and supplementation of regulations on preventing cross-ownership, halting the domination of large shareholders in managing and governing credit institutions, and curbing control and acquisition activities.

According to him, these requirements are reasonable, and it is essential for state management agencies, particularly the State Bank of Vietnam, to devise feasible solutions that are in line with this law.

Last year, Deputy Prime Minister Le Minh Khai signed Decision No.689/QD-TTg, approving the project titled Restructuring the Credit Institutions System in Conjunction with NPL Resolution for 2021-2025.

Under this project, there is an objective to reduce the number of credit institutions, primarily focusing on the disposal of weaker banks.

However, there have been concerns raised about a perceived lack of consideration for preventing the emergence of new struggling banks, raising serious concerns about the effectiveness of this restructuring effort.

The ultimate goal is to establish a sound and sustainable credit institution system by 2025, with the aim of having a mere two or three commercial banks from Vietnam listed among the top 100 strongest banks in the entire Asia region.

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