No "pampering" weak banks

No "pampering" weak banks

At the conference "Restructuring the financial sector and banking crisis - the world trend and the problems posed to Vietnam" by the Institute of Political Economy and coordination with the World Bank organized Times last week, experts have warned of the culm to endanger the safety risk of the banking system of small, weak but not potential merger or sale again (M & A).

Just like "individually"

Dr. Vu Dinh Anh, Vice Director of the Institute for Market prices - the Finance Ministry, said that as of March 2010, the 39-stock commercial banks, given the size of charter capital shall a 21/39 joint-stock commercial banks under 2,000 billion VND 3,000 billion VND under 30/39 and 9 / 39 on the 3,000 billion VND capital.

Topping the club over 3,000 billion dong "as Vietcombank to 12,100 billion VND (650 million) but may be VietinBank" bypass "because the bank’s charter capital is 11,252 billion and is expected to end 2010, VietinBank will release three more batches, increase the charter capital to $ 18,731 billion to 19,833 billion. This is followed by Eximbank (8800 billion), ACB (7814 billion), factoring (5115.8 billion), LienVietBank (3,300 billion), etc.

However, if the provisions in Decree 59/2009/ND-CP dated 16/7/2009, the Vietcombank and the VietinBank not classified "group shares" because the state still owns over 50% of charter capital and number of banks have capitalized on the 3,000 billion VND very little"Clearly, the size of joint stock commercial banks is too small in number relatively as compared to the scale economy of only about $ 100 billion in 2009," Mr. Anh said.

Back to the Decree 141/2006/ND-CP, since 2006, the government soon see the status of "multiple but weak" in the banking sector should be made barriers to capital raising potential target finance for small banks.

Accordingly, the end of 2008, the joint-stock commercial banks must meet capital levels equivalent to the legal capital level prescribed in this decree is 1000 and the end of 2010 billion is 3,000 billion. However, the end of 2008, only 28 units beyond "three Rie" and there are nearly 10 new units of the charter capital reached VND 1,000 billion by the end of 2009, a year later than stipulated in Decree 141 .

State Bank say what?

Should, in principle, if not ensure the level of this capital must be dissolved or make M & A but watch out, this is not possible and the source of the problem again from both sides: banks and management bodies.

First, the concept of "separate a corner of the sky" is still very big reigns in the behavior of banks. This is very clearly see, there are nearly 40 commercial banks, but shares elements "foreign" only in some banks as Techcombank, ABBank, Seabank, etc. while not have an M & A does in the banking sector in recent years.

Second is a problem related to the responsibilities of management agencies. Although nearly 10 banks delayed their charter capital increased by nearly a year route as above but management agencies are still relying hand and whether this could continue for the capital of 3,000 billion VND or not is a sign question.

Bring this issue discussed with the State Bank, Governor Nguyen Van Giau frank: "If the capital increase shall be prescribed treatment only, because already, they must obey the law. State Bank will have more treatment measures under current law and not indulge these cases. Not when the stock price is 10 times more eager to jump on the bank, and when the market slowed a time in difficulty ".

One other point worth noting, according to Decree 59/2009/ND-CP dated 16/7/2009 on the "organization and operation of commercial banks’ capital contribution, the rate of natural persons and legal entities respectively 10% and 20% of charter capital. Since 2010, the minimum charter capital of each bank was raised to VND 3,000 billion and the opinion that, if the operational quality of a bad bank affects the level of the system will be very unpredictable.

There have been a situation is assumed that an "extended" that send capital to the person named in a few banks. Then, "extended" is used to shareholders, "they" pressure the board and executives must be disbursed to your projectIn a stable market conditions, they may "not doing so" but unfortunately giants lose liquidity will try to ask result like?

According to the Governor, the level of contribution under Decree 59 will be reduced by half when the State Bank Law and Credit Institutions Law was implemented. Together, the State Bank shareholders will force banks to prove the origin of capital contribution, instead of just generic "no violations of law," he said. The shareholders’ capital ratio more than the law allows it to pull back or transfer.

Thus, the minimum charter capital of VND 3,000 billion, the transparency and reduce the rate of capital contribution is considered a good opportunity to state screening, remove the sick body in the banking system. Suppose, all in 2010, with banks unable to increase its chartered capital to VND 3,000 billion, the agency has managed to add an "excuse" as last year?