Incentive policy drafted to promote settlement of weak credit institutions
The move was made as the settlement progress of specially controlled credit institutions has been slow.
The State Bank of Vietnam (SBV) has proposed an incentive policy on the reserve requirement ratio for credit institutions (CI), which receives the compulsory transfer of specially controlled credit institutions, to promote the settlement of the weak credit institutions.
Under a draft circular to amend Circular 30/2019/TT-NHNN, the SBV states credit institutions, which receive specially controlled credit institution transfers, will have their reserve requirement ratio reduced by 50 per cent.
The move was made as the settlement progress of specially controlled credit institutions has been slow.
According to a report of the State Audit of Vietnam (SAV), progress in handling weak credit institutions, including OceanBank, GPBank and CBBank, is still slow as it has lasted for many years (since 2015).
The extension of the handling has led to an increase in the expected capital sources that have been used to aid the handling through special loan forms because the weak banks have reported consecutive losses.
By the time of the audit in August 2023, the handling of the three banks was only at the stage of the Government's approval of the mandatory transfer policy, and determining the bank value.
According to current legal regulations, DongA Bank must be transferred to another bank because its equity is negative.
Therefore, the SAV recommended that the SBV speed up the handling of weak banks.
The SBV should coordinate with agencies to urgently speed up the compulsory transfer of the poor-performing banks, the SAV said.
According to the SAV, relevant agencies must propose monitoring and intervention measures in accordance with the law to avoid losing the property of the State and people and ensure the safety and stability of the banking system.
According to the SAV’s report, the financial situation of the banks was still very difficult. Specifically, bad debts and mortgaged assets remained high; equity was negative; while accumulated losses continued to increase and failed to meet safety regulations in banking activities. — VNS
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