While Vietnam is trying to restructure weak banks, the Ministry of Construction is seeking approval from the State Bank of Vietnam (SBV) to set up a new bank.
Ministry of Construction supports setup of Vietnam Construction Bank
The ministry's proposal comes at the behest of the Vietnam Real Estate Association, and would establish the Vietnam Construction Bank.
Deputy Minister of Construction Nguyen Tran Nam said the proposal is appropriate to the country’s current economic circumstances and that it is in line with world trends for construction banks.
The proposed bank is expected to foster the construction of large construction projects and be a source of capital form construction materials, he noted.
He added that the bank would be a good thing for a slowing real estate market.
Banking restructuring
In late 2011, SBV Governor Nguyen Van Binh had made assurances to focus on restructuring weak banks this year to ensure the liquidity and avoiding bankruptcies.
Their strategy is to continue on their current course of mergers and acquisitions, at least through to 2013. This process is voluntary, but it is expected by SBV officials that there will further bank mergers to remain competitive.
Currently, the total assets held by the entire banking system in Vietnam is estimated to be over VND3,500 trillion (USD167.78 billion). But their entire chartered capital is just VND250 trillion (USD 11.98 billion).
Despite the big disparity in their assets, banks of all kinds have to comply with the same requirement of a minimum chartered capital of VND3 trillion (USD143.81 million), according to SBV regulations.
One anonymous official from the SBV admitted that 13.6% of commercial banks reported poor performance, apparently due to incompetent and inefficient management.
