HCMC – The State Bank of Vietnam (SBV), the central bank, will focus on inspecting share transfers among credit institutions this year to prevent cross ownership in the banking sector.
The above content, which has been approved by SBV Governor Nguyen Thi Hong, will be submitted to the National Assembly at its next session set for late this month.
According to the central bank, transfers of shares between banks, and between banks and companies might lead to an acquisition of and control over a bank. Thus, the SBV has recently taken measures to prevent cross shareholding and ownership in the banking sector.
This year, while conducting inspections of share transfers among banks, the SBV would put banks’ lending to VIP clients under inspection. Such inspections will be carried out on loans relating to the real estate sector, major shareholders and persons related to major shareholders of banks.
The SBV said the sanctions on cross shareholding or share ownership limit violations could hardly be applied when major shareholders and persons related to major shareholders intentionally hide their shareholding by asking someone else to hold their shares. The act of dodging the law might pose a potential risk to the banks’ operations due to a lack of transparency.
Those related to cross shareholding in banks fall within the competence of different ministries or agencies, causing difficulties for the central bank to prevent cross ownership in the banking sector as the SBV lacks information and tools to control the issue.
The SBV now completes the legal framework, including advising the Government to submit to the National Assembly the draft revised Law on Credit Institutions to effectively handle cross ownership in the banking system and reduce the abuse of rights by major shareholders to avoid their manipulation in the operation of credit institutions.
