Experts call on Gov't to consolidate banks

Saturday, Oct 24, 2015 09:00

A GP Bank office is undergoing renovation in Ha Noi. After three years of restructuring, it is time to further give heed to banks' quality, especially governance, human resources and capital. — VNS Photo Doan Tung

HA NOI (VNS)— The Government should instruct relevant ministries and agencies to further consolidate to make the restructuring of the banking system more effective, experts said at a conference in Ha Noi yesterday.

Addressing a conference on the restructuring of the banking system, director of the Viet Nam Institute of Economics Tran Dinh Thien said that the success of the restructuring depended significantly on similar efforts in other sectors.

For example, the restructuring of the banking system could not succeed without the consolidation of local enterprises, Thien said.

Dang Ngoc Duc, director of the Finance Banking Institute under the National Economics University, also said that it needed a further comprehensive co-ordination between the restructuring of credit institutions with the restructuring of other sectors such as State-owned enterprises and public investment.

Besides, Duc said, measures on tax and fee reduction or exemption related to trading of non-performing loans (NPLs) and mortgaged assets that were restructured should be also taken.

He said after merger and acquisition, credit institutions should also receive reduction or exemption in corporate income tax.

The legal framework should be further streamlined to better handle NPLs, Duc said.

Expert Le Tham Duong said after three years of restructuring, the central bank now should pay attention to the number of commercial banks and their model.

It was time to further give heed to banks' quality, especially governance, human resources and capital, Duong suggested, and added that there should be at least two large-sized commercial banks which were strong enough to compete against other regional rivals.

Besides NPLs, it is also necessary to further focus on loans that are risky to become NPLs, according to Duong.

Echoing Duong, Ha Huy Tuan, vice chairman of the National Financial Supervisory Commission said that lenders should learn from the experiences of the previous NPLs and be more cautious about new loans to avoid it becoming NPLs.

According to experts, the restructuring of the banking system has gained significantly in the past three years, avoiding a domino collapse in the banking system.

The restructuring also helped the banking system gain a stable interest rate and remove a serious liquidity shortage. According to the central bank, both deposit and lending interest rates currently were down by roughly 40 per cent as against 2011. The rates are equal to that of 2007.

The restructuring also handled weak banks, reduced the cross-ownership, and settled NPLs.

Truong Van Phuoc, vice chairman of the National Financial Supervisory Commission, said that the health of the restructured weak banks had been so far improved significantly with equity up 18 per cent, capital mobilisation up 147 per cent, credit up 87 per cent and risk provision fund up 146 per cent.

Despite the achievements, director of the Business Development Institute Le Xuan Nghia quoted the State Bank of Viet Nam's Governor Nguyen Van Binh as saying that the restructuring results in the past three years would be just a premise for the modernisation of the banking system to meet international governance standards of Basel II in the next stages. — VNS

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