Vietnam to restructure local banking system, M&A possible

The State Bank Governor Nguyen Van Binh has ordered relevant departments and offices to prepare for restructuring the banking system, including the possibility of merger and acquisition of small banks.

The State Bank Governor Nguyen Van Binh has ordered relevant departments and offices to prepare for restructuring the banking system, including the possibility of merger and acquisition of small banks, to ensure the health of the whole banking system, the local online newspaper Saigon Tiep Thi reported.

The central bank may encourage mergers and acquisitions (M&A) of small and inefficient banks, adjust banks’ ownership structures, and standardize the risk management system to restructure the local banking system, the newspaper detailed.

Restructuring the banking system is the most important task as for now, emphasized Le Xuan Nghia, deputy chairman of the National Finance Supervision Committee, saying that bad debts of the whole banking sector continued to rise, in which debts in category 5 (loss) accounted for as much as 47%. Bad debts at some banks exceeded shareholders’ equity and may not be recovered, Nghia added.

It is necessary to restructure the banking system, said Vu Ngoc Duy Deputy Director of the Banking Strategy Institute, the State Bank of Vietnam, adding that there is a need to develop a restructuring roadmap, in which merger and acquisition of banks is of much importance. Duy noted that M&A in the banking industry should be conducted basing on scales and operation efficiency of banks.

Source Sophie/ News Writer/ StoxPlus

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial

Posted by VBN on Oct 13 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