Oct 13, 2012

Vietnam - Governor declares war on the banking interest group

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VietNamNet Bridge – The Governor of the State Bank of Vietnam, Mr. Nguyen Van Binh, said that some banks are controlled by one or two shareholders or a group of dominant shareholders and up to 70-90 percent of the banks’ loans are granted to these shareholders.

In the program "People ask, the Minister answers," aired on October 7, Mr. Binh talked about the group interest and the recent rumors about some bankers.

As the head of the central bank, Mr. Binh admitted that the system of documents to manage the banking system does not keep pace with the development of joint stock banks, causing many gaps.

The banking system has developed very fast while the supervision and inspection activities are not effective, resulting in many implications today, Mr Binh said.

One of the implications that he mentioned is the matter of interest groups in the banking system.

"There are banks that are controlled by one or two shareholders or a group of dominant shareholders, up to 70-90 percent of bank loans are for this group of shareholders. Particularly, this group does not use capital effectively, causing loss of capital, forcing banks to be restructured," Binh explained.

The governor also concluded: "The group interest is the biggest barrier in the process of restructuring. It can manipulate banks and affect the whole system."

Mr. Binh also affirmed the determination of the State Bank in the fight against group interests in the banking system.

He said, in addition to some banks that collaborate with the State Bank in the restructuring process, there are some parts, groups of shareholders of banks colluded with reactionary elements at home and abroad to release distorted information about the banking restructure plan in order to confuse the public and to make management agencies shrink in handling this issue.

Regarding the fight against group interests, Mr. Binh said that in the recent self-criticism program at the State Bank of Vietnam, President Truong Tan Sang recognized to have no interest groups in the Party cell of the State Bank.

Binh said and pledged to "consistently moving forward "in the fight with interest groups to deal with weak banks, to make credit institutions healthy.

Also in this program, Mr. Binh said that it should not be said that the current difficult situation of business is caused by the tightening of the monetary policy.

"We cannot say that the monetary policy is too tight but it is managed strictly. The fact that some businesses facing difficulties has been anticipated. That is the cost to curb inflation, to stabilize macroeconomic stability and to implement the bank restructuring policy," Binh analized.

Gov’t plans to fix all weak banks in 2013

The Government has tasked the State Bank of Viet Nam to take necessary measures to tighten discipline on the banking sector and fix all weak banks in 2013, according to the Government’s newly-issued Resolution.

The central bank is also asked to design comprehensive solutions to deal with non-performing loans, increase foreign reserve, and strictly control the exchange rate.

The Government will continue to pursue flexible monetary policy to help businesses access to capital while trying to avoid the recurrence of high inflation.

The Resolution also says that the Government will continue to offer three-month extension of value-added tax payment of June 2012.

The Ministry of Planning and Investment is responsible for coordinating with ministries, agencies and localities to do well in compensation and site clearance, speed up investment promotion and take more measures to mobilize and disburse ODA and FDI capital.

The Ministry must quickly renovate statistics method in accordance with international standard to improve the precision of socio-economic data to serve the Government’s management and direction.


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