Central bank moves on weak lenders
Central bank moves on weak lenders
From September 20, the Governor of the State Bank of Viet Nam could appoint suitable credit institutions to buy stakes in other lenders that are under special surveillance of the agency, Prime Minister Nguyen Tan Dung has announced.
The decision was issued late last week in the context that the nation was stepping up efforts to restructure the banking system, an important pillar for propping up the economy when bad debts remained one of the biggest hindrances to national economic recovery.
Dung stipulated that lenders having to sell stakes would be those which suffered losses with values exceeding the values of their equities and reserve funds recorded in latest financial reports, adding any termination of their operations could endanger systematic security.
The Governor woul decide how much stake credit institutions should purchase and the State Bank could itself acquire stakes in weak lenders if necessary. The central bank might support the designated institutions through refinancing loans, special loans or by loosening requirements for their operations for a certain period of time.
Divestments would occur when the weak lenders returned to normal operations or when they were acquired or merged, with central bank permission.
"I think the State Bank intervention in fragile banks is reasonable and necessary," independent financial expert Nguyen Tri Hieu told Thoi bao Ngan hang (Banking Times).
Hieu said that choices to deal with weak commercial banks could be to let them seek ways to restructure or bring them under State control. However, in the current context, State interference seemed to be the only way.
Currently few domestic investors dared to invest in weak commercial joint-stock banks, he noted.
vietnamnews
