Wednesday, 22/1/2020
Restructuring banking system of Viet Nam
15/7/2013 21:41' Send Print

According to planned road map, by 2012 the State Bank should consolidate banking system’s payment ability, particularly of banks with problems to make bank finance healthy, focusing on settlement of bad debts, financial transparency, restructure of organization, operation and administration of the banking system.

One year after the restructure of the banking system, initial achievements were recorded. Notably the safety of credit system has been remarkably improved which ensures security of the State and people’s asset, closely control and gradually settle credit organization on the verge of collapse. However, the speed of restructure still falls short of expectation and there have not been measures to basically do away with large scale bad debts and risks have existed in the system.

Causes to this constraints include:

- Incomplete legal framework for restructure of credit organizations.

- The restructure and settlement of weak and ineffective credit organizations are complicated and sensitive undertakings which concern rights, obligations and interests of many stakeholders.

- Opposition and lack of cooperation on the part of major shareholders of ineffective limited commercial banks toward restructure.

- Insufficient public finance resources to settle bad debts and to build capacity of credit system and to make it healthy.

Solutions for acceleration of banking system restructure consist of:

First, to make an important step in completing the financial legal framework, bank operation especially regulations on banking system security to support the process of credit organizations restructure.

Second, to focus on settlement of bad debts by different measures.

Third, to encourage bank merge and rebuy and to improve banks’ self-finance.

Fourth, to consolidate risk management and to enhance efficiency and effectiveness of bank supervision and monitoring.

Fifth, settlement of cross-ownership of banks.

Sixth, to increase transparency.

To Anh Duong, PhD., Institute of Economics of Viet Nam