VNBA rejects Vietnam Credit’s bank ratings

The bank rating released by the private firm, Vietnam Credit Information and Rating Company (Vietnam Credit,) faces strong opposition from domestic bankers who believe that the credit rating firm was too hasty and gave unreasonable ranking.

On December 9, Vietnam Credit released their list of bank ratings, which assess the “health” of banks based on audited finance reports for 2008 and previous years.

Quick rebuttal by VBA

Just one day later, on December 10, the Vietnam Banking Association (VNBA) sent a dispatch to the State Bank of Vietnam (SBV), expressing its disagreement with the ratings after member banks voiced their opposition. VNBA stated that they had found problems with the bank ratings.

VNBA believes that banking, under the current laws, is a conditional business. Therefore, all activities relating to banks, including bank ratings, must be approved by SBV. Ratings must be authorized by SBV inspectors, who are in charge of bank ratings and have sufficient information about every bank’s operations.

As such, VNBA argues against allowing a private firm like Vietnam Credit to rate banks. They point to how the 2009 rating is based only on the audited financial reports of 2008 and previous years. They also claim that 2008 was a “special year” in banking, as they endured the global financial crisis and operated under “abnormal” conditions.

Therefore, VNBA asserts, it is unreasonable to assess the “health” of banks in 2009, a year with normal operation conditions, based on achievements in 2008, a year with unusual conditions.

According to VNBA, to provide an accurate assessment of bank operations, credit rating firms need to consider a lot of indices, data that only the SBV inspection agency has.

VNBA also emphasizes that, with current conditions, any inaccurate information released to the media will negatively affect the safety and stability of the banking system and the monetary market. Therefore, VNBA maintains, Vietnam Credit’s ratings have placed banks at a disadvantage, especially the ones with C-ratings and below

“We see that some banks, which have B-ratings, are in fact, listed as banks with good operations in 2009,” VNBA said.

VNBA has additionally requested that the SBV Governor inspect the rankings.

Vietnam Credit bank ratings The AAA-rating is given to the best bank, while D-rating is given to those on the verge of insolvency. A rating: Asia Commercial Bank (ACB) BBB rating: Sacombank, Techcombank, Vietcombank, Military Bank, Eximbank, Vietinbank, VP Bank, BIDV and Habubank BB rating: South East Asia Bank, Saigon Bank, Agribank, Dong A Bank, VIB Bank, Maritime Bank, Lien Viet, Saigon-Hanoi, Ocean Bank B rating: VID Public, HCM City Housing Development Bank, An Binh, Tien Phong, Vietnam-Thailand Joint Venture, PG Bank, Indovina, Saigon, Nam Viet, Mekong Housing Bank, Phuong Nam CCC rating: Shinhanvina, Viet A, Vietnam-Russia, Vietnam Thuong Tin, Bac A, My Xuyen, Mien Tay, Phuong Dong, Dai A, De Nhat, South Asia, Dai Tin, Gia Dinh, Vietnam Tin Nghia and Kien Long D rating: Viet Hoa Bank

VietNamNet/TBKTVN

Tags: vietnam bank, Vietnam finance news