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Best medicine for banking sector
Banking authorities envisage taking a comprehensive suite of measures in 2012 to ensure bank and credit institution healthy performances.
Accordingly, credit growth and the surplus from buying enterprise bonds in initial public offerings (IPOs) in 2012 will be capped at 15-17 per cent of total outstanding loans.
Besides, credit institutions’ credit growth targets will be set based on their ratings given by bank inspection and supervision bodies following the principle that good banks will enjoy higher credit growth indexes than banks of lower quality.
Credit organisations will be classified into credit entities with healthy performances (A), those with average performances (B), those with below-average performances (C) and feeble ones.
State Bank governor Nguyen Van Binh said the move could inspire banks to adopt strategies targeting swift, but quality and sustainable development.
BIDV chairman Tran Bac Ha assumed there needed to be clear criteria and conditions when credit growth targets are set based on banking and credit entities’ ratings and serious punishments must be exercised towards banks impinged on credit regulations.
Vietinbank chairman Pham Huy Hung said giving growth targets based on bank groups would be a smart move but banks’ ceiling deposit levels should be subject to regular checks and inspections to ensure whole system security.
Besides, to ensure effective implementation of National Assembly’s socio-economic development targets the State Bank will continue managing monetary policies in a flexible manner with priority given to bridling inflation and achieving macro economic stability and economic growth at reasonable levels. The monetary and foreign exchange markets will be governed in a way to match macroeconomic situation with a proposed 14-16 per cent hike in total money supply.
Diverse solution packages will be applied to restructure banking system in light of the government’s approved plan following the principle of there will be no collapses and gradually hiking banking system’s security and efficiency parallel to boosting bank performances.
By end of October 2011, commercial banks’ equity capital and asset value amounted to VND4,713 trillion ($224.4 billion), surging 13.5 per cent against late 2010.
Also by that time, banking system’s non-performing debts came to VND85.3 trillion ($4.06 billion), up VND35.5 trillion ($1.7 billion) against late 2010 and accounting for 3.39 per cent of total outstanding loans.
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