Vietnam Cuts Bad Debt Ratio to 2.9% in September: Govt Report

Minh Tam

15:48 20/10/2015

BizLIVE - The bad loan ratio of the Vietnamese banking system has been lowered to 2.9% in September 2015 from 17.43% three years ago, Prime Minister Nguyen Tan Dung has said in a report.

Vietnam Cuts Bad Debt Ratio to 2.9% in September: Govt Report

The State Bank of Vietnam headquarters. (Photo: Internet)

The reduction of the bad debt ratio was attributed to local commercial banks handling non-performing loans themselves and the role of the central bank-run Vietnam Asset Management Company (VAMC), the prime minister said in a report at the ongoing parliament sitting.
The report pointed out that the number of foreign and domestic credit institutions was slashed by 17 during the 2011-2015 period.
Since the start of 2015, the State Bank of Vietnam, the country’s central bank, has allowed Mekong Housing Bank to merge into Bank for Investment and Development of Vietnam, Mekong Development Bank into Maritime Bank, and Southern Bank into Sacombank. The merger of Petrolimex Group Bank (PG Bank) into Vietnam Bank for Industry and Trade is underway.
The State Bank of Vietnam has also taken over three ailing banks namely Vietnam Construction Bank, OceanBank and GPBank at zero cost. “From now to the end of 2015, weak banks will be handled through those measures,” he added.
“After pushing back the risk of collapse of the [banking] system, the State Bank of Vietnam has taken decisive measures to restructure commercial banks in two ways: handling bad debt and dealing with cross-ownership,” Mr. Dung said.
He stressed that the government will continue with the bad debt handling and refine the legal framework, aiming to facilitate the operation of credit institutions and the VAMC in line with international norms.
The prime minister noted the devaluations of the Vietnamese dong and the widening the trading band of the USD/VND rate were necessary to mitigate negative effects of the depreciation of the Chinese yuan and spur exports.