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In case that weak banks under M&A (group-4) are disclosed, do you think bank-runs shall occur?
One of the important factors to stabilize the currency market is to enhance depositors’ confidence. Depositors are easily affected by rumours with no firm confidence. However, fortunately, public confidence in the banking system has been even more enhanced. Evidence shows that people do not rush to massively withdraw money as what they did in the past despite panic information on weak banks.
I think it's clear and transparent guidelines and policies that contribute to enhancement in public confidence.
How can the DIV and the SBV respond to bank-runs with their limited financial resources?
The financial and banking markets are very sensitive. I believe that the Government and the SBV have had the most effective measures to stabilize them and prevent failure. In its capacity as deposit insurer, one of the most important tasks is to ensure depositors’ interests. The DIV always closely supervises business of insured institutions to understand the demand for financial supports and propose appropriate resolutions of troubled institutions, protect legal rights and interests of depositors, thereby contributing to the banking system’s safety and soundness.
In 2011, the DIV reimbursed more than VND 3 billion to 103 depositors in Tru Huu People's Credit Fund (Bac Giang province). This has ensured depositors’ interests, contributing to enhancing depositors’ confidence and stabilizing credit institutions’ operation in the area.
The deposit insurer is legally entitled to supervise credit institutions. So, based on supervisory results, what kinds of warnings can be recommended for the sake of maintaining the banking system’s safety?
Periodically, the DIV supervises all insured institutions of which there are 92 commercial banks, 11 non-bank credit institutions and 1,093 local and central People's Credit Funds. Periodical and adhoc supervisory reports on insured institutions’ activities have been further improved in terms of quality.
In case that an insured institution is exposed to high risks, affecting depositors’ interests and the banking system's safety and soundness, the DIV shall immediately give a prompt warning to insured institutions and simultaneously send reports to the SBV and other concerned agencies for appropriate resolutions. By conducting off-site supervision and on-site examination, we possibly can better assess the state of operation, current as well as potential risks of credit institutions.
