Ailing bank ratio accounts for less than 5pct of entire banking system: Governor

In response to anxiety of the National Assembly (NA) delegates on the “health” of the banking system currently, the State Bank of Vietnam (SBV)’s Governor, Nguyen Van Binh, on November 24 said that the proportion of weak banks in the banking system is less than 5 percent.

Particularly, the governor said, the country has 37 joint stock banks, of which, eight joint stock banks are very healthy and play key roles, eight others are middle, eight others are small in scale but have healthy operations and eight remainders are small banks with unhealthy operations.

In the restructuring plan for the banking system, the Governor said, the focus is to build a healthy banking system with enough competitive capacity to meet the requirement of growth in the future, not only in terms of capital but also about the quality of capital, and also to diversify the scale and ownership.

The scheme accepts medium and small- sized banks but they must have enough capacity to operate in a certain range.

The governor also admitted that Vietnam now has too many banks but he noted that the country is now lacking banking services.

According to the standard requirements of the Organisation for Economic Cooperation and Development (OECD), for every 1,000 people, there should be a banking transaction site. Meanwhile, currently Vietnam has 9,000 transaction offices compared to 84 million people, this ratio, according to the governor, is too low.

The governor also answered to the NA that the current difficulty is to reorganise the ailing banks. Accordingly, the restructuring must ensure the stability of the entire banking system to avoid a massive disruption. The governor also confirmed that the restructuring scheme for banking system has been built completely and it will be submitted to the government.

 

Category: Finance