Small banks sprint the final stage of restructuring process

Dec 18th at 21:26

18-12-2012 21:26:01+07:00

Small banks, which are the subjects to the compulsory restructuring in 2012, have geared up for their restructuring plans, when 2012 would finish in a couple of weeks.

Nine commercial banks have received the“ultimatum” from the State Bank of Vietnam that they must undergo a restructuring process in 2012. Of the nine, five banks including SCB, De Nhat, Tin Nghia, Habubank and Tien Phong Bank have basically completed the process. Meanwhile, the other four GP Bank, Navibank, TrustBank and Western Bank are still looking for the reasonable solutions for them.

Governor of the State Bank Nguyen Van Binh said restructuring should be carried out on a voluntary basis. However, the small and weak banks, if they cannot restructure themselves, the State Bank would intervene in the process, or even force them to merge into other banks.

A common thing of the other four banks is the lack of transparency of information. However, the restructuring plans of the banks have been partially exposed. As for Navibank, a senior executive of the bank said it has submitted its plan to the State Bank and the government.

Deputy Director of the HCM City Branch of the State Bank of Vietnam, Nguyen Hoang Minh, has confirmed that Navibank has submitted the plan.

A report released by the State Bank recently after an inspection tour showed that the bank is named in the list of the banks with the chartered capital at less than 3 trillion dong, the minimum required chartered capital for commercial banks.

After Navibank made additional provisioning against risks due to the bad debt increases, the actual stockholder equity of the bank has dropped to 2513 billion dong.

In the report to the Hanoi Stock Exchange dated November 14, Navibank’s Deputy General Director Nguyen Giang Nam did not deny the figure of 2513 billion dong provided by the State Bank. However, he said the bank has successfully improved the situation.

Also according to Nam, the stockholder equity of the bank by September 30, 2012, had reached 3,027 billion dong.

The Board of Directors of TrustBank has affirmed that its restructuring plan has been approved by the Prime Minister, while the State Bank on September 6 released a legal document saying that the bank’s plan was accepted.

A senior executive of TrustBank said the bank would mobilize the resources from domestic economic groups, institutions and individuals for its restructuring process, while it would not need the capital from the State budget.

“This is the major point of TrustBank’s restructuring plan, which aims to settle the inner problems with its strength, while it would not rely on the support from the State Bank,” the executive said.

Western Bank proves to be a special case. Initially established as a rural bank with the modest chartered capital of 320 billion dong; the bank grew up very quickly and obtained 3 trillion dong in 2011.

However, since the bank grew too rapidly, its corporate governance and supervision have become big problems. A high percentage of the bank’s outstanding loans have been provided to the back-door enterprises and shareholders, which has brought high risks to the bank.

Meanwhile, there has been not much information about GP Bank. The only official document about it is the 2010 finance report, which said that the bad debt ratio of the bank in 2010 was 1.83 percent only.