VietNamNet Bridge – The central bank issued a circular on
Thursday making clear that it will force banks under special scrutiny to either
revise up chartered capital or merge with others to secure healthy operations.
According to Circular No. 07,
fresh capital injections will ensure banks’ capital is not lower than their
legal capital while other safety criteria are met. If a bank fails to increase
capital as required, it will have to send the central bank a restructuring
project or will be compelled to merge with or acquired by other lenders.
The central bank will assign
credit institutions to contribute capital or buy shares of the banks under
special surveillance if struggling banks’ accumulative losses exceed their
chartered capital and reserve funds or their stoppage of operations may imperil
the banking system.
The circular stipulates that the
central bank will hold responsibility for special scrutiny over weak banks.
The agency will also decide the
selection of members of the board of special scrutiny, including officials of
the central bank, Deposits Insurance of Vietnam, banking experts and staff of
credit institutions.
This type of scrutiny is imposed
on banks facing insolvency or making serious violations.
Information about banks under
special supervision will be made public in the media, at their head offices, in
press conferences and on the websites of the banks in question and the central
bank. Solutions to fix these banks will also be announced.
The central bank’s governor will
decide time, content and methods to announce information on a case-by-case
basis.
The circular will take effect on
April 27.
Source: SGT
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