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Vietnam c.bank says to restructure banking system, ensure liquidity
The State Bank of Vietnam said it would restructure the banking system in the next five years via mergers and acquisitions and vowed to ensure liquidity for lenders. "Mergers and acquisitions are an indispensable trend to raise competitiveness", the central bank said in a statement on Tuesday, though it said it would deals to be conducted voluntarily.
After years of high credit growth, bad debts in Vietnam's banking system reached 3.04 percent of all loans at the end of July from 2.16 percent at the end of 2010, according to government statistics.
Smaller banks have been facing a funding squeeze after the central bank took strict measures to maintain a deposit ceiling at 14 percent, driving depositors to withdraw cash to deposit in large lenders.
Overnight lending rates have soared to between 17 and 19 percent in the past few days and the one-month rate jumped to 30 percent on Monday, the state-run news website VnExpress (vnexpress.net) said.
The central bank will ensure liquidity for every lender and the safety of the banking system, it said in a separate statement. "The State Bank of Vietnam has taken ... measures to support lenders to deal with temporary liquidity shortages, ensuring the liquidity safety of the system", it said in a statement.
Vietnam has more than 40 partly private banks, led by VietinBank and Vietcombank, as well as four fully state-owned banks. Last month, Vietcombank said a unit of Mizuho Financial Group agreed to buy a 15 percent stake in it for 11.8 trillion dong ($567.3 million), in what could be the largest acquisition in the country's banking sector to date.
reuters
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