Business
Vietnam's central bank to handle 5 weak banks this year
The State Bank of Vietnam (SBV), the country`s central bank, announced that five poorly-performing commercial banks will be handled definitively in 2017.
The five weak banks are VNCB, OceanBank, GPBank, DongA Bank, and Sacombank.
The central bank has already bought back three of them, including VNCB, OceanBank, and GPBank, the central bank's deputy chief inspector Nguyen Van Hung told.
During the past four years of banking system restructuring, the SBV had to acquire compulsorily three weak banks – Vietnam Construction Bank, Ocean Bank and GP Bank – at zero dong. In 2015, the central bank took over all shares from the three troubled lenders due to their management weakness, serious risks, and failure to find partners or devise feasible reform plans.
According to the central bank, the incomplete legal framework for handling weak banks and bad debts is hindering the restructuring of credit institutions.
The central bank in a note pointed out that it currently does not have adequate jurisdiction to handle weak banks, and there is a shortage of mechanisms and resources for handling bad debts and mortgaged assets, which increase risks to the system and the whole economy.
Statistics revealed that as of the end of 2016, bad debt ratio was controlled at below 3 per cent, but the central bank warned it could amount to 8.86 per cent if bad debts managed by the Viet Nam Asset Management Company and loans that could potentially turn into non-performing were included.
Credit institutions in Vietnam saw lending growth of over 18.7 percent in 2016 against 2015, while their capital mobilization grew nearly 18.4 percent, which helped the country curb its inflation rate at over 4.7 percent last year, said the central bank.
The central bank has already bought back three of them, including VNCB, OceanBank, and GPBank, the central bank's deputy chief inspector Nguyen Van Hung told.
During the past four years of banking system restructuring, the SBV had to acquire compulsorily three weak banks – Vietnam Construction Bank, Ocean Bank and GP Bank – at zero dong. In 2015, the central bank took over all shares from the three troubled lenders due to their management weakness, serious risks, and failure to find partners or devise feasible reform plans.
The central bank in a note pointed out that it currently does not have adequate jurisdiction to handle weak banks, and there is a shortage of mechanisms and resources for handling bad debts and mortgaged assets, which increase risks to the system and the whole economy.
Statistics revealed that as of the end of 2016, bad debt ratio was controlled at below 3 per cent, but the central bank warned it could amount to 8.86 per cent if bad debts managed by the Viet Nam Asset Management Company and loans that could potentially turn into non-performing were included.
Credit institutions in Vietnam saw lending growth of over 18.7 percent in 2016 against 2015, while their capital mobilization grew nearly 18.4 percent, which helped the country curb its inflation rate at over 4.7 percent last year, said the central bank.
