The Governor of the State Bank of Vietnam (SBV), Nguyen Van Binh, has admitted that the settlement of bad debts was going rather slowly, despite efforts by banks.
Bad debt in the banking system has been decreased by VND39 trillion (USD1.8 billion) so far, he said.
Governor of the State Bank of Vietnam Nguyen Van Binh
Speaking at a press conference on December 27, Binh failed to give details on bad debts by December but cited statistics by October that bad debts rate was 8.82%.
Banks are expected to set aside a combined VND90 trillion (USD4.3 billion) for for risk management this year, but so far it has only reached VND78 trillion (USD3.7 billion) this year, Binh said.
As part of the effort to deal with bad debts, many banks have cut Tet bonus to offset their provisional funds.
“Several banks have no documented plans for Tet bonuses this year because they have used profits to offset bad debts. Some banks have even forgone paying dividends to shareholders. This is a sign that the banking system is struggling with the problem of bad debt, and in order to ensure long-term and stable benefits for shareholders, as well as the banks futures,” Binh noted.
SBV’s chief inspector ,Nguyen Huu Nghia, said the bank has submitted to the Government a plan to deal with bad debts and set up an asset management company.
According to Nghia, the SBV has completed the compilation of two regulations to replace Decision 493/2005/QĐ-NHNN on debt classification and another on the usage of risk provision funds. It has also compiled a draft on new bank safety standards after their restructuring.
Among nine incompetent banks that are forced to restructure in 2012, only one bank has yet to map out their restructuring plan. However, the name of the bank has not yet been made available.
Nghia added that a run on banks is very unlikely, as confidence has increased.
“We have found some state-owned commercial banks that are inefficiently run, but we are taking steps to deal with these institutions,” Nghia said.
SBV’s Deputy Governor, Dang Thanh Binh, said after the merger of TinNghiaBank and FicomBank with Saigon Commercial Bank (SCB), the management of the human resources department of SCB has been significantly improved. SCB has since been able to serve their customers on a more reliable basis.
“The State Bank is now considering a plan for financial restructuring, with specific targets for next year," said Binh.
In November Nguyen Van Binh told the press that, among nine banks forced to restructure this year, five, including SCB, De Nhat, Tin Nghia, Habubank and Tienphongbank, have already made plans.The other remaining four GPBank, Navibank, TrustBank and Western Bank are continuing to find ways to solve their restructuring problems.
Tienphongbank recently announced an increase in registered capital from VND3 trillion (USD143.7 million) to VND5.55 trillion (USD265.9 million).
Previously, the bank had planned to raise its registered capital to VND4 trillion by the end of this year, after the DOJI Group, along with other investors, acquired 20% stake and took part in its restructuring process.
