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State Bank to review capital needs
The State Bank of Viet Nam has appointed a team to review and make any necessary adjustments to the capital that banks and credit institutions must hold.
Decree 141/2006/ND-CP of November 2006 stipulates that commercial joint stock banks - now classified as either rural or urban - must have reserves of VND1 trillion ($51.28 million) by the end of 2008 and VND3 trillion (US$153.84 million) by the end of this year.
A development and policy bank must hold VND5 trillion ($256.41 million) and foreign banks $15 million.
Although the regulations were enforced four years ago, the reserves of 23 of 42 credit institutions was still below VND3 trillion as of May this year.
And of 23 commercial banks that submitted their plans to increase their chartered capital to the required amount to the central bank State Bank last month, none proposed merger or closure.
The banks would, however, have to attract a total of VND30 trillion ($1.54 billion) in new investment during the next four months - no easy task for unlisted banks when monetary policies are rather restrictive.
Deadline
The SBV previously extended the deadline for about 10 commercial banks that were not able to raise reserves of VND1 trillion to meet the 2008 deadline. The banks managed to do so only by the end of last year.
The expected introduction of even stricter rules that will require commercial banks to have to registered reserves of VND5 trillion ($256.41 million) by December 31, 2012, and VND10 trillion ($512.82 million) by December 31, 2015, will make the task more difficult.
The policy is intended to eliminate the weaker banks in order to strengthen the overall quality and security of the financial system.
About six domestic banks that are not State-owned or have been partly equitised have charter capital from VND7 trillion ($359 million) to more than VND10 trillion ($513 million).
Decree No 82/1998/ND-CP of October 3, 1998, which applied until late 2001, set the reserve capital requirements for a rural commercial bank at just VND5 billion and VND50-70 billion for urban banks.
vietnamnet, vietnamnews
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