“Standing in the name of another” – “Bottleneck” in cross-ownership control...

Specifically, in a report recently sent to the National Assembly, the Governor of the State Bank of Vietnam (SBV) said that in recent years, the SBV has continued to improve the legal basis and resolutely implemented solutions to prevent and handle share ownership exceeding the prescribed limit, cross-ownership, lending, and illegal investment, along with the process of restructuring credit institutions.

Accordingly, up to now, cross-ownership between credit institutions and related persons of credit institutions contributing capital and purchasing shares in other credit institutions has decreased significantly. However, the State Bank also recognizes that cross-ownership may involve many entities under the management of ministries/sectors. There is still a situation of excessive ownership of shares in commercial banks (CBs) which are state-owned enterprises with a fairly large ownership ratio, and CBs have difficulty in requesting these shareholders to divest capital.

Cross-ownership and bank manipulation: "ghost" that destroys the economy (illustrative photo)

Regarding the work of detecting, preventing and handling cross-ownership and ownership with manipulative and dominating nature in credit institutions, the Governor admitted that there are many difficulties. Specifically, controlling cross-ownership is very difficult in cases where shareholders and related persons of shareholders deliberately conceal or ask other individuals/organizations to register the number of shares owned to circumvent the provisions of law on cross-ownership/ownership exceeding the prescribed level or circumvent the provisions on credit limits for related customer groups, the share ownership ratio of shareholders and related persons. This leads to the potential risk of credit institutions' operations lacking transparency and publicity, and at the same time, this can only be detected and identified through investigation and verification by the investigation agency in accordance with the provisions of law.

The detection of relationships between enterprises is still limited because information to determine the ownership relationship of enterprises, especially enterprises that are not public companies, is very difficult. The State Bank cannot proactively look up information as well as determine the accuracy and reliability of information sources; especially in the context of the current rapidly developing stock market and technology.

To detect and prevent cross-ownership, the State Bank said that in the coming time, this agency will continue to monitor the safety of credit institutions' operations and through inspections of capital, the status of credit institutions' share ownership, lending, investment, and capital contribution activities... In case of detecting risks or violations, the State Bank will direct credit institutions to handle existing problems to prevent risks.

The SBV leaders affirmed that they will continue to conduct inspections as planned or surprise inspections (if necessary), focusing on issues related to share ownership ratios; buying and selling, transferring bank shares, and granting credit to large customers/groups of customers (lending, investing in corporate bonds, etc.). The goal is to detect and direct the handling of existing problems, especially violations in credit granting, investment, capital contribution, and share purchase activities of credit institutions./.

Source: https://baodaknong.vn/dung-ten-ho-nut-that-trong-kiem-soat-so-huu-cheo-ngan-hang-252103.html