|
Proposed requirements on new banks drawing criticism
The draft decree on the conditions for bank establishment and governance, which is expected to replace the currently applied Decree 49, has not been applauded by relevant ministries.
Experts who criticise the proposed stricter requirements say that if the draft regulations were applied, the banking system would be thrown into disorder and immeasurable consequences would result.
The main aim of the of the new decree is to improve the quality of banks’ operations, and put an end to the race to set up new banks which has been occurring for the last two years.
The State Bank of Vietnam, the compiler of the draft decree, has suggested that newly set up banks must have the minimum chartered capital of VND3tril (the currently required chartered capital is VND1tril), while founding shareholders’ own capital would have to be at least VND500bil. The founding shareholders must have three consecutive, profitable years. The general directors of banks must have experience in managing enterprises which have the chartered capital of at least VND500bil.
Le Xuan Nghia, Director of the Banking Development Strategy Department under the State Bank of Vietnam, said that the requirements prove to be very strict as big state-owned corporations and economic groups have been asked to limit investments in non-forte business fields, while very few private institutions have enough capital to make capital contributions to banks.
Analysts have pointed out that the high requirement on bank general directors will result in a lot of directors getting sacked, while Vietnam is seriously lacking senior managers.
Nghia said that the draft regulation, if approved, would put big difficulties on operational banks. Therefore, the government has asked the State Bank of Vietnam to amend the draft, and set an itinerary for operational banks to upgrade themselves to meet the new requirements.
When asked if Vietnam should allow more banks to be established if its GDP remains modest at $70bil a year, Cao Sy Kiem, former Governor of the State Bank of Vietnam, and now a member of the National Advisory Council for Monetary Policies, said that it is not advisable to encourage the establishment of more banks.
Kiem said that in fact, banking is not as super-profitable a business field as some investors think. In the last two years, a lot of investors have planned to set up new banks to trade shares of the banks for profit. “However, as the national economy is facing big difficulties, I think not many investors want to do that even though the requirements are not as strict as in the draft decree,” Kiem said.
Kiem went on to say that the most important things now for the banking system are the high quality of services and the safety of the whole system. A big bank is not necessarily a healthy and strong bank, more banks does not mean more benefits for people.
VNN
|
