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Banking market to consolidate
Around 80 per cent of domestic banking market shares will be held by 12 to 15 major banks in future as part of a new sector restructuring plan.
State Bank of Viet Nam (SBV) Governor Nguyen Van Binh made the above comment at a Nhan Dan (People) newspaper forum in the capital yesterday, where he also revealed several key tasks scheduled until 2020.
Binh said that at least one or two giant banks would be established with the purpose of competing with other banks in the region during 2014-15.
"In the ASEAN region, a medium bank must have assets worth at least US$50 billion. As the largest bank in Viet Nam, Agribank only has $25 billion in assets however," he noted, adding that small – and medium – sized banks would still be allowed to operate following special regulations.
During the past few months, several incompetent banks and credit institutions have revealed many weaknesses.
Following the banking reform plan, during 2012, the SBV would roll out critical solutions in helping such incapable banks survive while ensuring depositor interests.
In 2013, the implementation of the reform plan would continue alongside spontaneous mergers amongst banks, Binh said.
In addition, a micro financing system would be set up in order to help customers access bank loans and services more easily, he added.
The central bank will retain its under 20-per-cent cap on banking system credit growth with the aim of curbing inflation next year.
It is expected to meet with commercial banks regarding the issue today. Accordingly, each bank is expected to have its own credit growth as allocated by the central bank based on the health of each.
The credit growth limit of banks next year will be dependent on performance quality assessments conducted by credit institutions and foreign bank branches, SBV Deputy Governor Le Minh Hung has said.
Currently, the SBV restricts credit growth to 20 per cent for all credit institutions. However, this has resulted in a situation where some banks want to boost credit but cannot, while others retain room for activity.
Banks that have no room for lending are mostly small size and include the Industrial and Commercial Bank of China, Hong Leong Viet Nam, the Commonweal Bank of Australia, BNP Paribas Viet Nam and MVT Standard Chartered Viet Nam.
Meanwhile, large-sized banks, especially State-owned ones, reported low credit growths, Agribank lending, for example, having surged by only 1.74 per cent by the end of October.
According to SBV statistics, 38 out of 115 credit institutions reported credit growths of more than 15 per cent at the end of October, of which 22 institutions experienced growth of more than 20 per cent.
As this growth exceeded the 20 per cent cap enforced by the SBV, the increasing rate of credit at many credit institutions has slowed down sharply over the past two months. In October, lending at 59 credit institutions decreased compared with previous months.
To deal with such unbalance, large-sized banks have joined hands with small-sized counterparts to offer loans totalling trillions of dong.
The SBV reported that credit growth experienced by the whole banking system this year was roughly 12-13 per cent compared to last year, with the figure by the end of November being 10 per cent.
If other credit-rooted investments are included, credit growth by December 31 will be around 15 per cent.
It further planned to restrict the average credit growth of the whole banking system at 15-17 per cent next year to help keep inflation under 10 per cent.
vietnamnet
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