Will submit to the Government a plan for compulsory transfer of two weak banks

According to a report from the State Bank of Vietnam (SBV) to the National Assembly , regarding banks under special supervision/weak credit institutions, in 2022 the SBV reported to competent authorities on restructuring plans for banks under special supervision and specific handling plans for each bank.

These banks include Construction Bank (CBBank), Ocean Bank, Global Petroleum Bank (GP Bank), and DongA Bank.

To date, the Government has issued a Resolution deciding on the policy of mandatory transfer of the two banks subject to mandatory acquisition.

oceanbank 1656996017.jpg — *OceanBank is currently undergoing restructuring.*

The State Bank of Vietnam is directing relevant parties to follow the procedures stipulated in the Law on Credit Institutions (amended and supplemented) to submit to the Government for approval the mandatory transfer plan for the two banks and to finalize the plan for submission to the Government for a decision on the mandatory transfer policy for the remaining bank to be acquired.

The State Bank of Vietnam has also decisively directed banks that are required to acquire businesses to hire consulting firms to determine the value of the businesses and to cooperate with these firms to carry out the business valuation, ensuring compliance with the law.

To date, valuation consulting organizations have issued valuation certificates, and the State Bank of Vietnam has sent the results to the State Audit Office for auditing.

Specifically, Saigon Commercial Joint Stock Bank (SCB) has been placed under special supervision since October 2022. The State Bank of Vietnam has coordinated with ministries and agencies to implement solutions to ensure the safety of the banking system and protect the rights and interests of depositors.

At the same time, based on the overall assessment report on the current situation and the proposed restructuring plan of SCB and the SCB Special Supervisory Board, the State Bank of Vietnam is seeking investors to participate in the restructuring of SCB to submit to the Government for consideration and decision on the restructuring plan of SCB in accordance with regulations.

The State Bank of Vietnam (SBV) stated that the restructuring process of credit institutions faces many difficulties due to various reasons. The search for and negotiation of eligible commercial banks to receive mandatory transfers (those with weak financial capacity, governance, and experience in restructuring credit institutions) is protracted and difficult because it heavily depends on the voluntary participation of commercial banks and requires time to persuade shareholders, especially major shareholders and foreign strategic shareholders, to agree to participate in the mandatory transfer.

The policy mechanisms and financial resources for handling weak credit institutions in general, and for developing a plan for the mandatory transfer of banks subject to mandatory acquisition and Dong A Commercial Bank in particular, still have many shortcomings, obstacles, and lengthy procedures.

The coordination and input from relevant ministries and agencies is still ongoing due to the complexity and lack of precedent in handling weak banks.

Furthermore, the capacity of officials and civil servants working in inspection and supervision is limited under the pressure of handling a large and complex workload, with urgent deadlines (simultaneously carrying out inspection and supervision work and restructuring weak banks).

In the coming period, the State Bank of Vietnam will continue to closely coordinate with relevant ministries, sectors, and agencies to urgently implement solutions to fundamentally address weak credit institutions.

Continue to refine the draft Law on Credit Institutions (amended), focusing on addressing shortcomings, improving mechanisms for handling weak credit institutions, enhancing governance and management capacity, especially risk management, and limiting and preventing the abuse of governance, management, and shareholder rights to manipulate banking operations for personal gain.

Direct the banks receiving mandatory transfers to finalize the mandatory transfer plan in accordance with the law and directives of competent authorities, submit it to the Government for approval, and implement it.

The State Bank of Vietnam is taking strong action against cross-ownership . According to the State Bank, cross-ownership involves many entities under the management of various ministries/sectors. The State Bank lacks the information and tools to control ownership between companies in different sectors.

Source