VietNamNet Bridge - Vietnamese commercial banks have started the second phase (2016-2020) of restructuring which sets higher requirements in settling existing problems and improving competitiveness.

The most outstanding outcome of the first phase of restructuring is the establishment of a series of new names formed up by merger and acquisition (M&A).

The Vietnam Construction Bank and GP Bank, which were bought by the State Bank at zero dong, have changed their brand identification.

TP Bank, with new owners, has carried out reform, while Nam Viet Bank, after it changed hands, was renamed into National Citizen Bank.

The name PVcombank emerged after the merger of PetroVietnam Finance and Phuong Tay Bank in 2013. The brand has been registered for protection in tens of countries in the world.

Vietnamese commercial banks have started the second phase (2016-2020) of restructuring which sets higher requirements in settling existing problems and improving competitiveness.

Commercial banks have been expanding their networks rapidly after the restructuring . PVcombank plans to open 5 branches and 15 transaction offices in 2016. TP Bank got permission to open 5 branches and 7 transaction offices earlier this year.

Settling bad debts is one of the key tasks of the restructuring process. A report of the State Bank of Vietnam showed that by the end of 2015, the total bad debt ratio of the banking system had decreased to 2.7 percent, lower than the 3 percent threshold targeted earlier this year.

TP Bank had seen its bad debt ratio decreasing from over 6 percent to 2.7 percent after two years of restructuring. As for SHB, after admitting Habubank and having the bad debt ratio at over 13 percent in 2012, had seen the figure drop to 5 percent by the end of 2013 and then to 1.7 percent by 2015.

PVcombank, with the consultancy from BCG, has reduced the bad debt ratio to 1.96 percent by the end of December 2015. The bad debts inherited from Phuong Tay Bank, which were the heaviest burden for the bank, have been settled through debt collection and collateral settlement.

While the most important goal of the first phase was debt settlement to improve the quality and M&A to reduce weak credit institutions, the second phase will focus on the improvement of the banks’ governance in accordance with international standards.

Analysts have warned that big difficulties are still ahead. The problems the Construction Bank are facing when trying to collect debts from Phuong Trang, a big client, showed that the bank still has to struggle to clear up the bad debts.

Local newspapers have reported that Eximbank still cannot organize the shareholders’ meeting because of problems arising from ownership transfer, and bad business performance which has sown division among shareholders.

Quoc Ha