Credit institution restructuring guarantees depositors’ rights

08:58-04/04/2017

This statement is made by Nguyen Van Hung - Deputy Chief Inspector of the State Bank of Vietnam (SBV)’s Inspection and Supervision Agency in an interview with reporter on the SBV’s credit institution restructuring in 2017.

Restructuring the system of credit institutions is one of the key tasks of the banking sector in recent time and years to come. Reportedly, the SBV has been building the Project on restructuring the system of credit institutions associated with resolving bad debts during 2016-2020. Would you please give us brief information of the Project?
Upon the results of restructuring credit institutions and dealing with bad debts in the past years, making analysis and identification of the problems and weakness of credit institutions, the SBV has attached an importance to restructuring credit institutions associated with handling bad debts and considered it one of the indispensable tasks of the banking sector in 2017. Accordingly, the SBV has been developing the Project on restructuring credit institutions and dealing with bad debts for the period 2016-2020.
At present, the SBV is no sooner finalizing the  Project Document under the direction of the Government to submit to the Politburo for its approval. Based on the approval and direction of the Politburo and the Government for the Project Document on Restructuring Credit Institutions and Resolving bad debts for the period 2016-2020", in 2017, the SBV shall develop a detailed plan and make full and best use of resources to drastically and comprehensively implement solutions to the Project.
Could you please tell us what the goals of restructuring credit institutions and resolving bad debts in 2017 are?

Mr. Hung has said that the SBV has identified the primary goals of restructuring credit institutions in parallel with handling bad debts in 2017 as follow: 
To continue maintaining macro-economic stability, well curb inflation; to ensure the major balances of the economy; to maintain and further enhance safety and soundness of the system of credit institutions;

To improve state management’s effectiveness and efficiency and ensure order, discipline as well as to positively fight against violations of laws in the field of monetary and banking.
To promote comprehensive restructuring on finance, operations, governance of credit institutions (especially the weak ones) in such manners, methods and roadmaps that are suitable to the specific characteristics of each credit institution and in line with market mechanism and principles on guaranteeing interests of depositors and maintaining stability and safety of the banking system;
To control and improve the quality of credit activities and consolidate bad debt resolution in accordance with market principles; to perfect the legal framework to support bad debt settlement and credit institution restructuring;

Dealing with bad debts should be closely associated with the deployment of measures to prevent and mitigate new bad debts arising and improve credit quality of credit institutions; to promote the role of the Vietnam Asset Management Company (VAMC) in resolving bad debts in order to maintain the non-performing loan ratio at a safe and sustainable level (below 3% of the total debts).

Would you mind telling us more clearly about objects under restructuring in the time to come?

The objects under restructuring in the coming time are all credit institutions including commercial banks being sold at the price of 0 VND, aiming at ensuring the system stability and protecting the interests of depositors. Accordingly, credit institutions must build and submit to competent authorities for approval and deployment of the restructuring plan. As for the banks being sold at 0 VND, the SBV has its own project to submit to the Government and the Politburo for their approval.

Besides, various solutions shall be made in details by types of credit institutions, including State-owned commercial banks holding more than 50% of charter capital; joint-stock commercial banks, financial companies and financial leasing companies; foreign credit institutions; Co-operative Banks, people's Credit Fund and micro-finance institutions.

There are individuals solutions of restructuring healthy credit institutions and those of restructuring weak ones.

At the meeting held recently to talk on the banking sector’s task performance and plan, Prime Minister Nguyen Xuan Phuc insisted that the SBV should “ensure the safety and stability of the system of credit institutions, protect the interests of the State and depositors in the process of credit institution restructuring". Is it one of the core principles of the SBV in the credit institution restructuring process?

Indeed, one of the core principles of the SBV in the process of restructuring credit institutions is to guarantee the interests of depositors, which has been confirmed by the SBV in what they have done with the credit institution restructuring. It shall be also primary principle mainstreaming the process in the year to come.

Accordingly, measures and forms of restructuring shall be made in line with the specific characteristics of each credit institution and the market mechanism based on ensuring the interests of depositors and maintaining stability and safety of the financial system in accordance with the Party's policies on restructuring the financial markets, with a special focus on credit institutions as advised in to Resolution No. 05-NQ / TW dated 01/11/2016 of the Central Party Committee XII’s 4th Conference.

Thank you very much.

Source: "thoibaonganhang.vn" – Translated by V.D.H