Struggling banks grapple with radical restructuring plans

Under the government approved plans for a banking sector shakeup, the State Bank (SBV) is targeting underperforming banks, with a particular focus on the restructuring of small joint stock banks.

Weak banks, including TrustBank, Western Bank, Navibank and GP.Bank, are racing against time working on their restructuring plans.

However, only the TrustBank so far has had its restructuring plan rubber-stamped by the government and the SBV.

The TrustBank received the go-ahead from the State Bank in late December 2012 to hold a general shareholder meeting to agree the bank’s restructuring plan.
The meeting shall take place in late January 2013, according to a TrustBank source.

Under its approved restructuring plan, TrustBank will not rely on government financial backing, and instead turn to domestic sources to bolster the bank’s capital.

In the short-term, the bank will strive to maintain stable operations of its traditional products and services, continuing to serve agricultural development, farmers and rural areas in the Mekong Delta, maintaining branches and gradually launching services targeting the construction industry and social housing developers.

Western Bank made great strides in the second half of 2012 in restructuring its assets and improving its management, paving the way for it to achieve its annual profit target, while simultaneously driving down non-performing loans to a permissible level.

By the end of 2012, the bank had raised VND11 trillion ($523 million) in deposits, a 17 per cent increase compared with the end of June 2012.

Navibank claimed its self-restructuring plan had been forwarded to the State Bank and the government. However, there is little concrete information about their proposal.

In terms of the banking sector’s on-going restructuring process, SBV former chief Le Duc Thuy underlined the sector’s need for sweeping changes in the coming period, including radically targeting underperforming banks in order to ensure the sector’s health.