Sustainable growth tops lender wish-list for 2019

Dao Minh Tu, Deputy Governor State Bank of Vietnam

To ensure the effective implementation of the National Assembly’s Resolution No.42/2017/QH14 and prime ministerial Decision No.1058/QD-TTg on tackling bad debts of local credit institutions, under our proposals to the government, the local courts shall be urged to accelerate procedures dealing with bad debts. We will also join hands with the People’s Supreme Procuracy and the ministries of Public Security and Justice to facilitate the process of returning collaterals being held as material evidences for criminal cases after related procedures are completed.

The ministries, sectors, and relevant units and organisations will be required to scale up efforts to accelerate the streamlining and restructuring of business, laying down the premises for credit institutions to bolster efficiency in tackling bad debts. The General Department of Civil Judgment Execution under the Ministry of Justice needs to shortly introduce mechanisms and policies and guide the units working on judgment execution at all levels to ensure the effective implementation of the measures set in Resolution 42.

The Ministry of Natural Resources and Environment needs to soon enact regulations on ways to deal with collaterals of half-finished real estate ­projects, while the provincial and municipal people’s committees must guide their relevant units to be consistent in executing the tasks set in Resolution 42, and taking measures to ensure effective implementation, particularly regarding the seizure of collaterals.

We also plan to seek the prime minister’s approval to assign the Ministry of Finance and relevant competent bodies to team up with the Ministry of Planning and Investment in addressing legal bottlenecks and seeking permission to use the state budget or other state capital sources to boost state commercial lenders’ charter capital, as well as removing the legal hurdles related to state capital support sources to enable commercial banks and the Bank for Social Policy to vigorously implement diverse priority credit programmes, pivotal projects, and social welfare programmes in order to successfully realise government-assigned tasks and targets.

Vietnamese banks have ambitious plans to roll out in the year ahead

Nirukt Sapru

CEO, Vietnam and ASEAN, and Southeast Asia Cluster Markets, Standard Chartered Bank Ltd.

There are five key topics I would like to highlight for the coming year to allow the banking sector to best support the continued growth of the ­economy.

First, good conduct and transparency in the banking sector should continue to be a focus to improve the business landscape and contribute to fair competition and an inclusive economy. We highly appreciate that the State Bank of Vietnam (SBV) has stipulated the requirements of the Code of Conduct in the internal control systems of banks in Circular 13. We continue to support the SBV’s focus on conduct in the banking sector.

Second, digitisation and cybersecurity will continue to be of the utmost importance. In the spirit of digitisation and paperless targets, we suggest that the government allow payment automation by connecting with e-channels and simplified supporting documentation requirements.

Third, the non-bank financial sector should be appropriately regulated, particularly in the provision of consumer credit, where control over capital and liquidity requirements, as well as collection practices is important.

Fourth, consumer mortgage lending should be treated separately from lending to builders and developers in the real estate sector. Consumer mortgage lending using proper credit controls, such as appropriate loan-to-value ratios, helps the Vietnamese people develop home ownership and build household wealth. It is separate and distinct from higher-risk lending to builders and developers.

Fifth and finally, Basel II implementation will continue to improve governance standards in the market. As part of this process, banks should be assigned with ratings and credit growth limits based on their capital, liquidity ratios, and strategy that the governor has already highlighted.

Trinh Ngoc Khanh Chairman, Agribank

The charter capital hike is our repeated proposal, but we would like to stress it again due to its necessity. In fact, to avoid impinging on the capital safety regulation when lending out to feed production needs in the winter-spring crop season, last December we raised VND4 trillion ($174 million) worth in long-term bonds to enrich capital sources, a remarkable part of which came from Agribank employees.

Another issue is that Agribank expects that under government guidance, the relevant localities could soon complete their land use plans, paving the way for us to accelerate the pace of equitisation.

Finally, the government needs to consider revising and supplementing Decree No.96/2014/CN-CP dated October 17, 2014 presenting administrative sanctions in the monetary and banking fields, and the Ministry of Finance needs to review Circular No.12/2018/TT-BTC dated January 31, 2018 on financial supervision and assessment of state capital investment efficiency at credit institutions, making it suitable with current development practices of banks in general and large-scale banks in particular.

Le Duc Tho Chairman, VietinBank

To quickly and radically tackle bad debts and associated collaterals, besides the implemented measures, VietinBank has a proposal to the government that the central bank needs to push up efforts for the establishment of an effective debt trading market through presenting more concrete guiding documents compared to those set in Resolution 42.

Besides, to boost the efficiency of debts collection and the mortgaged asset treatment process, more effective co-operation between ministries, the people’s committees in provinces and municipalities, and the media is essential.

We propose the debts of businesses whose debts were sold to Vietnam Asset Management Company (VAMC) and have feasible business plans be classified as Group 1 debts that are accessible to further loans, helping them to continue production and business activities, from there having the capacity for debt repayment.

The government needs to continue its work on business restructuring, equitisation, and state capital divestment at state-owned enterprises. To facilitate the process, VietinBank will work closely with the Commission for the Management of State Capital at Enterprises, and would-be-equitised enterprises during the restructuring and divestment process, helping them to select strategic partners and consultancy units, while in the meantime facilitating them to improve production and investment efficiency.

Phan Duc Tu Chairman, BIDV

First, the government, ministries, sectors, and the central bank need to ensure the seamless management of policies, developing the state market as a long-term capital raising channel for the economy, sharing and reducing the pressure for long-term capital sources in the banking sector.

Second, as the capital adequacy ratio of state commercial banks is generally low, the government, the Ministry of Finance, and the SBV need to take measures to help banks raise charter capital. In the case of BIDV, we want the conditions applicable to the foreign strategic investor to soon be addressed, enabling us to be able to finalise transactions.

Third, the SBV shall join efforts with ministries and sectors to soon submit the government’s amendments to the governmental decree on administrative sanctions in ­banking.

Fourth, as banking is a specific field, it is important to standardise the skills and provide certificates to human resources, particularly those working in operation and risk control and customer service.