The State Bank of Vietnam, the country’s central bank, will likely allow merging weak banks to avert breakdown of any credit institutions in an attempt to boost the local banking sector, SBV’s Vice Governor Tran Minh Tuan told leaders of state-owned companies recently.
The SBV has recently taken flexible measures to boost liquidity of some banks such as open market operations and refinancing tools.
“However, from the next year the SBV will consider merging several small and weak commercial banks to consolidate the banking system,” Tuan said.
Tran Bac Ha, chairman of the Bank for Investment and Development of Vietnam (BIDV) forecast that profit of local banks will see lower profit due to soaring inflation and economic slowdown in the first half this year.
In addition, the value of non-performing loans will directly hurt their profit, Ha added.
Meanwhile, Pham Huyen Anh, vice head of SBV’s Banking Department said that it is high time to raise the capital-asset ratio (CAR) of local banks to 12 per cent in line with Basel II from current 8 per cent of Basel I being adopted in Vietnam now.
Prime Minister Nguyen Tan Dung recently directed the SBV to temporarily stop licensing new banks to build a new regulation.
There are a number of foreign banks which have sought to increase their holdings in Vietnamese banks, including HSBC receiving a nod from the government of Vietnam to hold an additional 5 per cent to raise its ownership to 20 per cent.
Vietnam now has five state-owned banks, two policy banks, 34 joint stock banks, 44 foreign bank branches, five joint venture banks, 13 financial leasing companies, nine financial companies, 54 representative offices of foreign banks and nearly 1,000 people credit funds. (cafef.vn, Saigon Economic Times)
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