State Bank leader eases banking sector concerns

SBV Governor Nguyen Van Binh insisted the banking sector was over the worst

Binh’s message was intended to calm National Assembly members who had earlier asked him to clarify how the banking system had been restructured.

“The financial system’s safety has been ensured and controlled. The danger of collapse and risk in the system has been pushed back. Liquidity has been ensured, with the state’s assets and the public’s deposits completely safe, even in the weakest banks,” he stressed.

“Positive beyond-expectation results in the reform of state-owned and joint stock banks have been clearly seen,” he added.

According to the State Bank of Vietnam (SBV), restructuring plans for BIDV and Mekong Housing Bank would soon be approved.

The SBV had also approved schemes for Vietcombank and Agribank. Changes will be made to Agribank’s member council, management and control boards to renew the bank’s leadership. “This year is expected to see Agribank’s credit growth reach 7-8 per cent, with the focus largely on rural and agricultural development,” Binh said.

The SBV is also appraising restructuring plans for financial leasing companies owned by state-run commercial banks. The SBV will also compile a master plan to raise the financial capacity of five state-run commercial banks until 2015. This plan will be submitted to the prime minister soon.

“Equitisation of state-owned banks has gone well with results exceeding expectations,” Binh said.

Regarding joint stock banks, the SBV reported that out of nine banks defined as weak since 2012, eight banks had seen their restructuring schemes approved, with the remaining bank’s restructuring plans to be submitted to the prime minister in due course.

“All the approved plans are being implemented under the close eye of the SBV. So far, five banks have been merged [including De Nhat, Tin Nghia, Habubank, Western Bank and Dai A],” Binh said.

“The SBV has approved plans to merge Southern Bank with Sacombank, and MDBank with Maritime Bank. It is also guiding the acquisition of some credit organisations,” he said.

By late June 2014, total assets and deposits among the country’s nine weakest banks rose 3.l7 and 3.28 per cent respectively, against the 2013 figures. They also recorded credit growth of 10.18 per cent against late 2013.

The SBV has also approved restructuring schemes for 24 of the country’s 25 joint stock commercial banks.

Ernst & Young’s senior partner financial services Asia Pacific Keith Pogson said Vietnam should use the Law on Bankruptcy to eliminate weak banks that were impeding the banking system’s development.

“I’m sure that foreign investors are still interested in Vietnam’s banking potential. I have worked with many foreign investors holding stakes in many Vietnamese banks. They say they have no plans to withdraw capital from these banks,” Pogson said.

Last week saw the US-backed JP Morgan Bank president Nicolas Aguzin in a meeting with Deputy Prime Minister Vu Van Ninh, express the hope of participating in Vietnam’s commercial bank restructuring. Ninh said banks like JP Morgan were welcomed to participate in developing the Vietnamese banking system.