Banks are regulated to extremely strict standards.

Monitoring cross-ownership of banks

Participating in the questioning of Deputy Prime Minister Le Minh Khai on the morning of June 8, Delegate Ha Sy Dong (Quang Tri delegation) stated: Many National Assembly deputies agreed with the assessment of the National Assembly Economic Committee that the situation of cross-ownership and manipulation of group interests in the banking sector is still very worrying, despite the fact that the banking industry has gone through many stages of restructuring, the consequence is that the risk of cross-risk in the banking and financial system has flared up again, especially when the Van Thinh Phat incident broke out in early October 2022.

From the above issue, delegate Dong asked Deputy Prime Minister Le Minh Khai to give his opinion on this issue?

Finance - Banking - Banks are regulated to extremely strict standards. — Delegate Ha Sy Dong (Photo: Quochoi.vn).

Responding, Deputy Prime Minister Le Minh Khai said that credit banks are special institutions and conditional business sectors, so they are controlled and supervised according to very strict standards.

The Deputy Prime Minister acknowledged that cross-ownership will impact manipulative behavior in banking activities, especially credit activities. Allocating credit capital to the interests of cross-ownership groups will distort economic activities and affect the general environment.

According to the Deputy Prime Minister, the State Bank has recently actively inspected, examined, and handled the situation of cross-ownership, but Mr. Khai said there are also difficulties.

To limit cross-ownership, the Deputy Prime Minister said the Government has directed the State Bank to review the operating mechanism of commercial banks and amend the Law on Credit Institutions to have a solid basis for controlling and handling cross-ownership.

In addition to strengthening inspection, examination and supervision, the Deputy Prime Minister said that the internal control system of banks must also detect deviations. The Deputy Prime Minister further emphasized the solution of strictly handling violations, publicly and transparently so that investors and people have information to check, supervise and handle this situation.

Bond market gradually stabilizes

Delegate Sung A Lenh (Lao Cai delegation) raised the issue that recently the real estate market has frozen, real estate businesses have difficulty accessing capital. The corporate bond market is in crisis.

According to the delegate, many real estate businesses are slow in paying principal and interest on bonds, especially when the pressure to mature and pay interest on corporate bonds in 2023 is very large. The volume of corporate bonds in 2023 is nearly VND 290,000 billion, of which the third quarter is the largest with VND 103,000 billion.

This, according to the delegate, has caused frustration for many people, reduced market and investor confidence, so capital mobilization from bond issuance is low, posing a potential risk of social instability.

“I request the Deputy Prime Minister to clarify the responsibilities of State management agencies on this issue? What are the guiding viewpoints and fundamental solutions to promote the safe and healthy development of the real estate market and corporate bonds?”, the delegate questioned.

Finance - Banking - Banks are regulated according to very strict standards (Figure 2). — Deputy Prime Minister Le Minh Khai answers questions (Photo: Quochoi.vn).

Responding, Deputy Prime Minister Le Minh Khai said that the real estate and corporate bond markets are facing many difficulties, affecting macroeconomic management and business operations.

The first reason why businesses are stuck in handling bonds is because of improper management of circulation and use of cash flow in financial leverage. In some cases of violations, the police have investigated and prosecuted.

According to the Deputy Prime Minister, the bond market is also not yet sustainable in structure, leaning towards risky markets such as real estate. The production and business situation of enterprises after the Covid-19 pandemic is financially difficult, so the liquidity of individual corporate bonds is also very difficult.

The Ministry of Finance's report stated that the bonds due for payment as of December 31, 2022 are 1.2 million billion VND, of which the maturity in 2023 is 290,000 billion VND, which businesses are obliged to pay.

Besides, real estate also faces many difficulties due to legal reasons, product structure such as few low-priced products, many high-priced products; and investor capacity.

The Deputy Prime Minister said that the Prime Minister has established a working group headed by two Deputy Prime Ministers to study and evaluate the existing problems, limitations, causes, and propose solutions. When these two working groups have reports, the Government will direct to remove difficulties for the real estate and corporate bond markets, and agencies will strengthen inspection and supervision to ensure transparency of these activities.

In the first quarter of 2023, enterprises and State management agencies have stabilized the situation, continued to remove difficulties in the spirit of enterprises having responsibilities according to civil contracts, the State participating in inspection and control to promote the implementation of commitments according to obligations, if there are violations, they will be strictly handled, protecting the rights of people and investors .

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