Bank restructuring remains on paper
In fact, the warnings about the weak banking operation were given by experts a long time ago already, who urged to restructuring the banking system to improve the national economy.
However, only recently has the State Bank of Vietnam sent the messages about the determination to restructure banks. Right after the message was conveyed, the information has stirred up the public. This has become the topic in many discussions and on many forums. People are waiting with impatience to see what bank is the first one to be restructured.
However, to date, no concrete action has been made, while the bank restructuring remains on paper. The State Bank of Vietnam has said it is still compiling the bank restructuring plan which will be submitted to the government in the time to come.
According to the State Bank, the bank restructuring process will be carried out in three phases. In the first phase, measures will be applied to ensure the solvency of every credit institution and the whole banking system. In the second phase, the credit institutions will be restructured in accordance with the approved plan. Meanwhile, in the last phase, the institutions will be bought, sold or merged into others.
When will interest rates decrease?
Right after taking his office, Governor Nguyen Van Binh stated that the central bank would force the interest rates down to 17-19 percent. The statement once raised doubts among the public, because the interest rates were even lower than the deposit interest rates banks had to pay to mobilize capital.
Just after one week, a lot of measures have been applied to ensure that the instructions by the central bank can be strictly followed by commercial banks. The State Bank has punished some banks, which deliberately paid the interest rates of more than 14 percent per annum, breaking the current policy on the ceiling interest rate.
Not only applying administrative orders, the newly appointed Governor has gathered strength through a dialogue mechanism with the 12 biggest banks. The banks are powerful enough to dominate the market and give policy consultancy to the central bank. Once the 12 powerful banks decide to reduce the interest rates, people believe that the market interest rates will go down.
However, the interest rate reductions have been applied only for some certain subjects. Meanwhile, businesses say that the 17-19 percent interest rates are still unaffordable to them. Therefore, they still expect to see the interest rates decreasing further.
What will be the gold market management mechanism like?
Right after taking the office, the governor has been facing the most serious “gold fever” in the history. The gold price hit the highest peak which was 4 million dong per tael higher than the world’s price.
The governor then applied a “traditional method” – allowing to import gold – to ease the gold fever. However, unlike previously, the governor allowed to import gold with unlimited quantity to ensure the profuse supply.
After that, 5 banks and one goldsmith company, SJC, have been chosen to sell gold to the market to stabilize the prices.
However, after the great efforts made in the last few months, the gap between the domestic and the world’s price is still large – 1-2 million dong per tael.
Monetary policies to be loosened?
A message on the credit market management in the last months of the year was conveyed late last week. The State Bank of Vietnam, on one hand, affirmed that it has been applying necessary measures to fight inflation and to ensure macroeconomic certainties. However, the central bank, at the same time, showed the signs of loosening the lending to the real estate sector.
Analysts say that after many months of tightening the monetary policies, it is now the right time to apply flexible policies to settle the problems arisen by the policies.
Le Khac
Business & Investment Opportunities
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