SBV to finance 15tr dong capital for 10 small banks

The State Bank of Vietnam (SBV) held a meeting with all credit institutions from September 5 to 7 to discuss on lowering the interest rates whereby the central bank gave measure of spending some 10-15 trillion dong to finance 10 small banks.
Some solutions given by the central bank at the meeting included suitable refinancing for small banks and the financed capital may be included in the capital contribution of the central bank. In addition, the central bank may become the majority shareholder taking the dominating holding in small banks via economic measures.

Thus, the reform of banking system will start from small banks.

A senior official of the central bank said that small banks also have certain roles in the economy. These banks can provide services for households, farmers, individuals, small businesses, markets and small and medium-sized enterprises (SMEs) within their limitation.

Small banks that face imbalance in terms of capital and lack of liquidity will be refinanced sufficiently. The total amount of capital to fund for 10 small banks of about 10-15 trillion dong is negligible compared to the full capital sources of the whole banking system.

The funding will come with conditions to minimize the risk activities such as allowing mobilizing capital in certain limits only. In fact this restriction is to narrow the operation scale of these banks until small banks become better again.

To be funded, small banks must have collateral. If not, the funding will be calculated in the central bank’s capital contribution. This therapy has high feasibility and once becoming dominant shareholder, the central bank can manage and control small banks with its intentions. – Vietbiz24

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial

Posted by VBN on Sep 8 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry