VietNamNet Bridge - Commercial banks are rushing to set up more branches and transaction offices after a long period of interruption.

 

On the first working day after the Tet holiday, Viet Capital Bank announced it was seeking 200 new workers, including key personnel for the post of bank branch director.

Just in the short time from the fourth quarter of 2015 to early 2016, many branches and transaction offices were licensed.

Only after five years have Vietnamese witnessed a new wave of banks expanding their networks. Thoi Bao Kinh Te Viet Nam estimated that over 20 commercial banks were licensed to open nearly 100 new bank branches and transaction offices within the first two months of 2016.

The Viet Capital Bank, for example, plans to employ 200 workers because it has a license from the State Bank’s Governor to open 10 more branches.

Other commercial banks have been allowed to open 6-10 more branches each. In late 2015, some banks got licenses to set up new many branches.

Analysts commented that this is the biggest licensing campaign in the last five years.

The State Bank (SBV) has once again turned the green light on banks to expand their networks after it turned the red light in 2011. At that time, the watchdog agency stated it temporarily would not grant more licenses as it needed to improve the legal framework.

Commercial banks are rushing to set up more branches and transaction offices after a long period of interruption.

Analysts believed that the real reason behind the State Bank’s decision to halt the licensing was the massive establishment of bank branches.

At that time, they warned that too many branches and transaction offices in such conditions was just like the heavy traffic on a small bridge. 

There were many big problems at that time: inflation kept escalating, and commercial banks, while trying to attract more deposits, broke the interest rate ceiling set by the State Bank. There was also unhealthy competition in the banking system.

As such, SBV needed to build a new bridge.The bridge building was completed in September 2013, when the Circular No 21 on the establishment and operation of bank networks was released.

The legal document, according to analysts, sets higher technical requirements to ensure the safety of the system. 

Banks have to make avprofit, cannot violate the regulations on operations safety and must comply with the regulations on debt classification and provisioning. They must have a non-performing loan ratio at below 3 percent of total outstanding loans.

However, only two years after the bridge was built, did the State Bank kick off a new campaign of licensing. This, according to analysts, showed that the banks' health has improved and they now can satisfy requirements.


TBKTVN