Nov 27, 2012

Vietnam - Vietnam Completes Inspecting, Auditing Nine Weak Banks

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The State Bank of Vietnam (SBV) has finished inspecting and auditing nine ailing banks, the Saigon Times reported.

The central bank has directed to hire international auditing company to audit banks and the central bank also conducted comprehensive inspection.

The lack of cooperation, even opposition from major shareholders of ailing banks towards the policy and the restructuring measures directed by the central bank has made it difficult to restructure the credit institution system.

This is one of those difficulties in the restructuring process of the system of credit institutions in general and the banking sector in particular, the government stated in the latest report on the implementation of the master plan on economic restructuring.

In addition, limited national financial resources to deal with NPLs and to improve financial capacity of the system have also slowed restructuring process, the report says.

“The State Bank of Vietnam (SBV) has fundamentally controlled the situation of ailing banks. The payment capability of such lenders has improved and the risk of system instability has been minimized”, the report adds.

Local credit institutions have had ample available funds by the third quarter of this year, especially state-run commercial banks.

In details, three out of nine weak lenders were merged. Tien Phong Bank and Habubank’s restructuring plans were approved. The central bank is presently directing to develop and finalize appropriate reorganization plans for the remaining four lenders. The government will also monitor the restructuring process to ensure safety and stability of the whole system as well as the health of post-restructured banks.

Besides, a scheme to restructure the state-owned lender Agribank has been submitted for approval while Bank for Investment and Development of Vietnam (BIDV) and MHB have basically finished equitization and become joint stock commercial banks.

Bad Debts on a Slower Rise

Bad debt increase has slowed since Q2/2012 [Jan: +7.29%; Feb: +8.42%; Mar: +9.35%; Apr: +8.28%; May: +6.59%; June: +1.2%].

By the end of the second quarter, VND36.5 trillion non-performing loans have been tackled.

By the end of August, the local lenders spared VND72.907 trillion in loan loss provision, up VND14 trillion from late 2011. Credit institutions have used provisions to handle VND8 trillion bad debts in the first eight months.

Source StoxPlus

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