Restructuring commercial banks is an urgent task for the country’s banking system. However, it must be considered very carefully to avoid a shock to the economy. 

Han Ngoc Vu, Chairman of Vietnam International Bank (VIB), said VIB has set its restructuring targets to improve its competitiveness and development model in line with international practices.

Most policy makers at central international banks want their financial institutions to have higher capital reserves, but this is not feasible for some commercial banks as their shareholders lack the capital to improve infrastructure facilities, which has a negative impact on the financial market. To address this issue, the State Bank of Vietnam (SBV) has asked those banks to merge, Vu added.

Le Cong, Director General of Military Bank (MB), shared the view that Vietnam now has a larger number of credit organizations than its economic scale. Therefore, it is high time to improve the management of commercial banks and ensure the safe operation of the entire banking and financial system.

The SBV proposed restructuring the banking system a long time ago. However, the work has been slow going. In the meantime, a number of new commercial banks have opened and many banks in rural areas are upgraded to urban ones.

Economist Nguyen Quang A said the SBV should review the contributions the banking system has made to the economy before it decides on merging or dissolving a number of banks.

He said those banks which are not operating well need to be restructured and merged with larger banks. Commercial banks are only part of the financial system, but the economy today depends on them to a great extent. Therefore, Vietnam should expand its financial system with other kinds of credit institutions.

Restructuring the financial system has now become a sensitive issue and it requires an appropriate solution to ensure transparency and prevent bad debts.

Former SBV Governor Le Duc Thuy said instead of creating an illusion of larger and stronger banks, Vietnam should keep its banking system under control. It should ensure none of its banks go bankrupt and restructure them under specific circumstances.

The banking system is crucial for providing investment capital for socio-economic development and ensuring the stability of the national financial system and macroeconomy. Therefore, careful planning is a key to restructuring the system succefully.

Source: VOV