Toughest days over

Eight names have disappeared from the market, including MDBank, MHB, DaiABank, Ficombank, TinNghiaBank, SouthernBank, WesternBank and Habubank.

Tran Hoang Ngan, a renowned economist, National Assembly’s Deputy, said the current number of banks was ‘reasonable’. However, he noted it is not important how many banks are operational, but how to manage the banks in the most effective way.

Regarding the quality of the ‘major surgery’, Ngan noted weak banks all have recovered well in accordance with plans set up by SBV: the steps of selling accumulative losses and debts and controlling outstanding loans have been taken in a cautious way to make profits and create a healthy financial situation. 

Truong Van Phuoc, deputy chair of the National Finance Supervision Council, noted that despite the big difficulties in the debt settlement process, the banking system still can make profits. Except three banks that take loss, the system still could make the post-tax profit of VND34 trillion in 2014, an increase of 5.3 percent if compared with 2013 and 13.8 percent if compared with 2012.

“The process of restructuring and settling bad debts has brought encouraging success. It has been going in a way suitable to Vietnam economy’s conditions and status,” Ngan said.

He noted that in the context of the lack of cash, this way of bank restructuring followed by the State Bank proves to be the best one.

Bankruptcy

In the past, SBV only held stake in five state-owned commercial banks, namely Agribank, Vietcombank, BIDV, Vietinbank and MHB, but the number doubled after it bought three banks – VNCB, OceanBank and GP Bank – at zero dong.

In fact, economists still question the legitimacy of the State Bank’s move of buying weak banks at zero dong. Some of them commented that the State has ‘nationalized’ the banks, saying that in this case, shareholders have lost their money.

However, SBV affirmed that the move is legal if referring to current laws. Meanwhile, Phuoc denied that the state has nationalized the banks, saying that the banks lost their money and they have been taken over.

According to Le Thi Nga, deputy chair of the National Assembly’s Legal Committee, IMF (the International Monetary Fund) suggested that declaring banks bankrupt should be seen as a reasonable way to deal with weak banks.

Nga also thinks that it would be fair if the state lets weak banks go bankrupt.

Tien Phong