Initial outcomes of the restructuring of banking system

(VOV) - The project to restructure credit organizations between 2011 and 2015 has achieved certain progress. Bad debts have been basically handled; the liquidity of commercial banks having been secured; and inter-bank interest rates having been stabilized.

Over the past three years, the State Bank of Vietnam has taken various measures to restructure commercial banks, foreign banks, and credit organizations. The number of credit organizations and branches of foreign banks has fallen through mergers.

A number of banks have been restructured or merged for better performances.

Other banks have decided to undergo self-restructuring by increasing chartered-capital.

Doctor Le Xuan Nghia, former Deputy Head of the National Financial Supervisory Committee, said the process has yielded positive results, stabilizing the liquidity of commercial banks and the gold and forex markets and consolidating bank clients’ trust.

According to Nghia, the committee has “addressed 17 ineffective banks. Some of them have successfully conducted mergers or self-restructuring like Tienphongbank, the National Citizen Bank, Saigon Commercial Bank, and the Bank for Investment and Development of Vietnam (BIDV). Besides the State Bank of Vietnam has purchased several weak banks at 0 dong, although they had been given time for restructuring or mergers.”

Bad debts have been reduced to 3% from 4.3% in 2012. Restructuring has helped to slash interest rates and increase production capital for enterprises, according to Vu Manh Tien, deputy Director General of the National Citizen Bank.

Tien noted that “we’re continuing the restructuring plan which has been approved by the State Bank of Vietnam because we are not among the banks dealing with mergers. We’ve gained certain successes in the process.”

SBV Governor Nguyen Van Binh said this year is the second phase of restructuring involving all major banks including BIDV, Vietinbank, and Vietcombank.