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Wednesday, November 30, 2022

Vietnam to complete handling of poor-performing banks by 2025

The Saigon Times

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HCMC – The Government has approved a banking sector restructuring and bad debt settlement plan in which the handling of poor-performing commercial banks will be basically completed by 2025.

A decision on the 2021-2025 plan signed by Deputy Prime Minister Le Minh Khai states that measures will be taken to prevent the reemergence of weak banks.

The number of commercial banks nationwide will be reduced through mergers.

The decision says there will be at least two to three banks to make it to the list of the top 100 banks in Asia.

Banks should have a capital adequacy ratio (CAR) of at least 10%-11% by 2023 and 11%-12% by 2025, according to the plan.

To reach this target, banks will have to map out plans to increase their charter capital, CAR, governance, and operation capacity.

Based on data from independent auditing firms, banks and financial companies are divided into three groups: those with a strong financial capacity and a large scale, those with a small and medium scale and poor-performing ones.

By 2025, banks in the three groups will have minimum charter capital of VND15 trillion, VND5 trillion and VND750 billion, respectively.

Poor-performing ones must deploy restructuring and recapitalization plans and enhance internal inspections to promptly detect and minimize risks.

The bad debt ratio is expected to be below 3% by the end of 2025.

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