Customers conduct transactions at the Sai Gon – Ha Noi Joint Stock Commercial Bank branch in Ha Noi. — Photo vnexpress.net

In a report submitted to National Assembly's deputies, Binh noted that the mutual direct share ownership between banks and businesses accounted for a very small percentage of the total charter capital of the banking system.

He attributed the decline in cross-ownerships to the State's strict inspection and supervision; the issuance of new legal regulations, as well as a rise in the merger and acquisition (M&A) of banks.

A few years ago, cross-ownerships posed a threat to the country's banking system as it was partly liable for a rise in bad debts at banks.

In the report, Binh remarked that apart from the reduction in cross-ownerships, the central bank had also stepped up the process of restructuring and handling credit organisations.

The purchase and sale and M&A activities in credit organisations took place strongly and safely not only between weak credit organisations and normal ones but also between normal credit organisations or between domestic credit organisations and foreign ones on a voluntary basis and in accordance with the law, he explained.

Thanks to the drastic restructuring of weak banks, the charter capital of credit organisations at the end of February 2015 increased by 3.45 per cent year-on-year to VND436.3 trillion (US$20.1 billion).

Binh also affirmed that the restructuring of credit organisations played an important role in stabilising the financial system and macro economy; supporting monetary policy regulations; and creating a basis for the acceleration of credit organisations' restructuring in the time to come.

The central bank would continue to review and carry out some M&A cases with the participation of State-owned commercial banks to form one or two commercial banks that would have scale and qualification equivalent to regional banks by the end of this year, he said.

Binh reported that the strong restructuring process had helped 11 Vietnamese banks enter the list of Top 1,000 World Banks 2014 published by The Banker magazine. He added that Vietnamese banks also accounted for the majority in top 10 in the rating of banks in the Southeast Asian region in terms of capital adequacy ratio tier 1.

Last year, international credit rating agency Moody improved the credit rating of the long-term issuer of bank deposits in domestic and foreign currency for BIDV and Vietinbank from B3 to B2; upgraded the credit rating of deposits and ranking of long-term issuer of bank deposits in domestic and foreign currencies for VIB from B3 to B2, with a stable outlook.

Sai Gon – Ha Noi Joint Stock Commercial Bank also retained a stable outlook; five other joint stock commercial banks, namely MBBank, Sai Gon-Thuong Tin, Techcombank, ACB, and VPBank, had their outlook updated from "stable" to "positive," he said. — VNS