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Gold, forex trust operations to be halted
The State Bank of Viet Nam is expected to issue new regulations to tighten trust operations of credit institutions, including domestic and foreign commercial banks.
Banks that conduct trust operations are allowed to manage and trade in assets held in trust for clients, including gold and foreign currency.
Under a newly-released draft circular, credit institutions and foreign bank branches would not be allowed to take part in trust operations involving gold or foreign currency. The move would be consistent with the current State Bank strategy to more strictly control the gold and foreign currency markets.
Banking expert Nguyen Tri Hieu applauded the developments, saying that commercial banks should not be allowed to take part in trust operations and urging the central bank to separate commercial banking and investment banking operations. Commercial banks that conduct trust operations were doing the work of investment banks rather than ensuring capital flows for the economy, Hieu said.
The draft decree would not limit banks and other credit institutions from taking part in trust operations involving other types of assets. They would be allowed to act as trustees in one or more lines of banking services in accordance with the Law on Credit Institutions and the terms of their licences as granted by the State Bank.
"Two existing circulars govern trust operations but remain inadequate and difficult to apply," the State Bank said in releasing the draft circular. "Provisions in the draft would help ensure fewer risks in trust operations and include detailed provisions on trustors and trustees and their responsibilities," it stressed.
The draft circular would apply to such trustees including commercial banks, finance and financial leasing companies, co-operative banks, people's credit unions and branches of foreign banks.
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