Credit institutions undergo drastic restructuring

Update: May, 09/2018 - 09:00
The banking industry is drastically restructuring credit institutions (CIs) in combination with bad debt settlement to ensure their safe, healthy and sustained growth. — Photo

HÀ NỘI — The banking industry is drastically restructuring credit institutions (CIs) in combination with bad debt settlement to ensure their safe, healthy and sustained growth.

Deputy Governor of State Bank of Việt Nam Nguyễn Kim Anh said this at a forum on the banking industry towards sustained growth, held in Hà Nội on May 8.

According to Anh, the restructuring of CIs has so far been positive with the non-performing loans (NPL) ratio of the entire banking system being kept at below 3 per cent.

To ensure the sustained growth of the banking industry, SBV will soon finalise the appraisal and approval of CIs’ restructuring plans besides closely supervising the operation of CIs, especially ailing ones, to timely take actions.

The central bank has so far approved the restructuring plans of most banks. However, the restructuring plans of financial companies and financial leasing companies are still being prepared.

As for State-owned commercial banks, the restructuring would focus on enhancing the banks’ financial status after their restructuring plans are approved by the Prime Minister, Anh said, adding that according to a decision issued last year the on restructuring CIs in combination with NPL settlements for 2016-20, State-owned banks must improve their charter capital to meet Basel standards.

SBV’s Deputy Chief Inspector Phạm Huyền Anh said the central bank would also resolutely deal with the cross ownership and violation of the limit regulation on ownership of shares at banks to avoid group interests, which could cause damage to the entire banking system.

Solutions on trading NPLs according to the market mechanism would also be implemented together with measures to control risks of the trading method, Anh said.

As for monetary management policy, Nguyễn Thanh Hà, director of SBV’s Monetary Policy Department, said the central bank this year would continue to manage the monetary policy actively and flexibly in order to better control inflation and support economic growth.

He did say however that there should be a close co-operation between monetary and fiscal policies and the State’s price management mechanism in order to make the policies effective, as inflation is under pressure owing to global price volatility, price hikes of goods managed by the State, and high growth of local consumption demands and securities markets.

Moreover, the rising inflows of foreign direct investment, foreign indirect investment capital and divestment of State-owned enterprises would hit the central bank hard this year, and provide a challenge to balance cash flows to moderate the pressures on inflation, interest rates, and the USD/VNĐ exchange rate, he said.

At the forum, experts praised SBV’s handling of monetary management policy in recent years, noting it had helped stabilise the macroeconomy, support economic growth, and create confidence among investors.

The experts suggested the central bank continue to apply the current stable and flexible monetary management policy as it was suitable and effective.

According to Nguyễn Xuân Thành, director of Fulbright University Vietnam, the monetary management policy is operating so well that the central bank should not loosen it.

SBV had to do so a year ago to support economic growth, which reached only over five per cent in the first quarter of 2017, Thành said, adding that the country’s gross domestic product (GDP) growth last year was supported significantly by the monetary policy.

However, the policy should not loosen this year as the GDP rate was good in the beginning of the year, with positive signals in domestic demands and exports as well as in manufacturing and processing, Thành added. — VNS