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Banks will be able to fulfill capital increase plan
Commercial banks still are dynamic, have good ‘resistance’ to difficulties, and meet requirements on safety ratios, according to Governor of the State Bank of Vietnam Nguyen Van Giau.
Giau, in a talk with the press, said that the central bank is aiming to meet 5 goals.
How would you describe the operation of the banking system in 2008?
Commercial banks still are dynamic and still have a good ‘resistance’ to difficulties. Sometimes one or another bank has capital in excess or a lack of capital, which is quite normal. One bank may lack capital if major clients make big withdrawals, but it can then borrow money to balance it out.
The requirements on compulsory reserve ratios, and other regulations, are still being followed by commercial banks. The debt classification to the five groups has also been strictly followed. Banks have made provisions for bad debt (the debt of group 5).
As the state management agency, what has the State Bank of Vietnam been doing to support the banks in anticipation of the worse situation in 2009?
In other countries around the world, competent agencies will have to sit together to discuss solutions if there are negative signs for the banking system. In fact, only the securitized markets have been shocked, while in Vietnam, the banking operations have mainly been traditional services
Currently, the State Bank of Vietnam is focusing on five goals: 1/ creating good liquidity; 2/ regulating the market so that the interest rates can go down; 3/ allowing the extension of debt payment if necessary; 4/ providing loans in the Cuu Long River Delta so as to collect all paddies in stocks; and 5/ doing the necessary things to assist businesses, which are in demand, to access bank loans.
Do you think that all joint-stock banks will be able to increase the chartered capital to VND 1 trillion by the end of 2008, as required?
Commercial banks have all been trying to obey Decree 144 by the Prime Minister on raising the chartered capital to VND 1 trillion, as required. However, some banks may have problems in procedures. This will happen in this way: if banks have enough for the VND 1 trillion, they will have to put the VND 1 trillion into accounts at the central bank, and they will be recognized as meeting the requirements.
For example, bank A now has the chartered capital of VND 600 billion, and it has been successful in calling for shareholders to contribute another VND 400 billion, but it has not fulfilled the capital increase in terms of the procedures. However, the central bank will temporarily recognize that the bank has enough for the required VND 1 trillion if the bank puts VND 400 billion into the account at the central bank. The formalities will be fulfilled after that. I think this is the best way.
Ten banks need to increase capital to have VND 1 trillion in chartered capital, as stipulated in the Decree 144. The State Bank has worked something out with all the banks and all of them are proving to be able to meet the requirements, and the existing problem is merely the procedures.
If the foreign currency market worsens, will the State Bank of Vietnam interfere with the market by asking businesses, which have foreign currency earnings from exports, to sell foreign currencies to banks?
The market is running in accordance with the supply and demand laws. We will do what the laws allow us to do. Besides, we will also refer to international commitments, for example the ones with the IMF.
The exchange rate performs in accordance with the market supply and demand. It would be groundless to say the VND will lose value by 30-40%, or revaluate in the time to come.
As far as I know, the State Bank has asked commercial banks to make reports about real estate loaning. Have the banks sent reports about this?
The real estate credit remains within reach, which accounts for 9.15-9.5% of total outstanding loans of the whole banking system.
TBKTSG
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