VietNamNet Bridge – Sheer greed and poor governance, coupled with lax State management, have made the banking system the biggest sinner in the current economic situation, economists said.

Some banks are owned by only one family. Some have given 70% of their funding to only one person, who just pours it into a single project, said Le Dang Doanh, former president of the Central Institute for Economic Management.

With a regulatory ownership limit of 5% for individuals and 10% for organizations, such a situation is deplorable, he stressed.

“Many regulations have been introduced, but they are not taken seriously, leading to instability,” said the economist at a workshop themed “WTO membership and sustainable development of Vietnam’s banking system”. The event was organized by Vietinbank Human Resource Development and Training School in Hanoi this Tuesday.

Some lenders know very well their corporate clients have falsely declared their assets but have still granted them loans, which are not used for business and investment. This has fueled the real estate bubble, said Doanh.

Ha Huy Tuan, vice chairman of the National Financial Supervisory Commission, said banking system monitoring failed to keep pace with the evolution of banking operations, which entailed a lot of risks such as cross-investment, cross-ownership and lending to the preferred groups of clients.

Sharing this view, Nguyen Thi Hai Ha, deputy head of Vietinbank Human Resource Development and Training School, said the banking system currently posed many risks.

The vulnerability of the banking system has spread far and wide, from lending and mobilization to cross-ownership and hidden operations, she remarked.

Le Hoang Nga from the State Securities Commission suggested the banking system should have a code of practice and rules of behavior.

If breaking these rules, bank executives must be permanently banned from banking practice and put on the black list of the system. In addition, they would be handled according to the Civil Law, the Criminal Law and the Banking Law, she suggested.

Agreeing with this suggestion, Tuan deemed it necessary to accelerate banking system restructuring, improve risk management and bank monitoring, and develop a reliable data collection system.

Source: SGT