Nguyen Van Binh told reporters that the central bank would encourage voluntary merger and acquisition (M&A) among local banks, ensuring benefits of depositors as well as economic rights and duties of related sides. A few credit institutions facing high risks will be treated with special legal measures, he said.

The central bank will be assessing and classifying lenders into three groups of healthy banks, temporarily cash-strapped banks, and weak ones. Healthy credit institutions will be facilitated to scale up business and strengthen competitiveness at home and abroad, Binh said.

Meanwhile, those weak banks that have failed to recover need to be drastically tackled for the soundness and safety of the banking system. Meanwhile, those credit institutions which are confronted with liquidity problems temporarily will be supported by the central bank and at the same time have to review and strive for better improvement.

The next step focuses on the key role of strong state-owned commercial banks and joint stock lenders in assisting weak credit institutions through appropriate support from the Government and the central bank relating to mechanism, policies and resources.

The State Bank of Vietnam will also manage to tackle bad debts in order to secure enough capital levels for banks as required by laws besides changing balance sheets’ structure in a much more sustainable way at banks.

Credit institutions are advised to develop their main business activities while scaling down risky and ineffective business spheres. Accordingly, local banks are requested to concentrate on the important breakthroughs of the 2011-2020 socioeconomic development strategy, including rural areas and agriculture, export and supporting industries, manufacturing, and small and medium enterprises.

The central bank will also reform the banking governance system in line with international practices, focusing on executing risk management system in compliance with Basel Committee’s principles and standards.

Source: The Saigon Times Daily