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Wednesday, June 26, 2024

Problem banks need to be fixed swiftly: SAV

The Saigon Times

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HCMC – The long-delayed handling of four poor-performing banks could put the banking system at risk, said the State Audit of Vietnam (SAV) in a recent report to the National Assembly.

The report said that the delay could result in a waste of resources as these struggling banks are in dire need of special loans for restructuring. The SAV has called upon the State Bank of Vietnam (SBV) to expedite the mandatory transfer process for these banks.

“Mandatory transfer” refers to the process in which weaker banks are acquired by stronger ones that have resources to restructure them.

The four banks which need restructuring are DongABank, Construction Bank (CB), OceanBank, and Global Petroleum Bank (GPBank). All of them have been placed on the SBV’s special surveillance list.

In May, the SBV proposed the compulsory handover of these banks, a proposal that has received approval. However, as of August 2023, only DongABank had received government approval for the transfer. The other three banks are still undergoing valuation for potential handover.

These banks are grappling with financial difficulties such as high ratios of bad debt, stagnant assets, negative equity, and mounting losses, so they do not meet safety standards for banking operations. Some of them can potentially cause instability in the banking system.

Difficulties in looking for suitable commercial banks and holding negotiations have been cited as a reason for the delay.

It should take time to persuade shareholders, especially major and foreign strategic ones, to take over the four problem banks.

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