Foreign banks will
be encouraged to compete equally as well as boost business co-operation with
domestic credit organisations, under a plan adopted by Prime Minister Nguyen
Tan Dung last week.
The scheme for restructuring the banking system through 2015 would call
for the forging of close links between local and foreign institutions to help
develop products, improve governance and modernise technology.
Foreign ownership ratios would be increased, particularly for weaker
joint-stock commercial banks. Foreign institutions will be encouraged to
contribute capital and buy stakes in weaker domestic entities, while parent
institutions overseas would be asked to guarantee the payment capacity of
affiliates in Vietnam.
Domestic commercial banks and finance companies would therefore be
classified into three groups – healthy, temporarily short of liquidity, and
fragile in order for authorities to approve suitable measures, such as
reorganisation, merger or acquisition, reform of risk management systems, and
the interference of the State Bank of Vietnam or other agencies.
Dung has also tasked the Ministry of Finance to co-operate with the
State Bank of Vietnam to develop a plan to deal with the bad debts of credit
institutions, as well as plan needed increases in charter capital by State-run
commercial banks through 2015. The State Bank last month allocated varying
credit growth quotas for this year to four groups of banks based on their
health and performance.
Dung said State-owned commercial banks would also play an important
role in the restructuring of the banking system.
"They should be the driving force in the banking system, with
large scale, safe and efficient operations, advanced management capacity, and
the capability to compete domestically and internationally," Dung said.
Dung urged State-owned banks to implement comprehensive restructuring
by hastening equitisation, improving asset quality, expanding transaction
networks, diversifying capital sources and controlling credit quality. They
should target a bad debt ratio of below 3 per cent and gradually reduce
outstanding loan ratios to no more than 90 per cent of deposits, he said.
By 2015, there would be then be one or two State-run banks which would
rise to a regional level in terms of scale, management, technology and
competitive capacity.
"They should be flagship institutions in investing in key sectors
of the economy such as infrastructure, export, agriculture, rural areas,
production, and small – and medium-sized enterprises," Dung said.
VIR/VNA
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