This afternoon (November 23), the National Assembly discussed in the hall the draft revised Law on Credit Institutions. Many of the delegates' comments focused on issues such as: early intervention, special control, special lending to credit institutions, reducing manipulation, reducing cross-ownership, handling weak banks, etc.
The top factor is to determine which individual or organization is the bank owner.
Speaking at the meeting, delegate Trinh Xuan An (National Assembly delegation of Dong Nai province) said that the revised Law on Credit Institutions is difficult and has a great impact on the socio-economy, even security and order, so it needs to be studied carefully and thoroughly.
According to him, the provisions of the draft law must aim at a dual goal, which is to create a mechanism to promote the healthy development of the credit institution system, but must be safe to support the economy.
Commenting on some specific contents of this draft law, delegate Trinh Xuan An said that he continues to be interested in the issue of creating a mechanism to handle cross-ownership.
He stated that through the SCB case and the current situation, the "trio of monsters" pose great risks to the system, which are cross-ownership, control, and manipulation of credit institutions. These issues need to continue to be identified for handling and elimination.
Delegate Trinh Xuan An (Photo: Quochoi.vn).
According to Mr. An, cross-ownership, control and manipulation are very sophisticated and often invisible tricks. However, the tools as designed by the law (reducing the shareholding ratio, reducing the credit limit and expanding the subjects who are not allowed to hold positions) are tangible to treat the invisible, which is ineffective.
Explaining this issue further, delegate Trinh Xuan An said that the core of the banking system lies in the issue of governance. To combat cross-ownership, manipulation, and domination in the banking system, the top factor is to determine which individual or organization is the real owner of the bank.
Therefore, the Law needs to establish a legal framework to identify individuals or organizations that have the power to control and influence decision-making in banking operations.
The delegates proposed to make information of all individuals and organizations that are shareholders of commercial banks transparent instead of reducing the ownership ratio; to determine the obligation to disclose information for shareholders (both organizations and individuals) and groups of related people who own shares of credit institutions above a specific level. Next, it is necessary to control cash flow and capital contribution sources through non-cash payment mechanisms and apply personal data control.
Sharing the same view, delegate Dieu Huynh Sang (Binh Phuoc National Assembly delegation) said that regulations on related persons in credit institutions are an urgent requirement in the current period. Because the issue of manipulation and "front and back yard" in banking activities is a "hot" issue. Serious violations in banking activities have been discovered recently.
According to this delegate, the provisions in the draft Law on this content aim to limit manipulation and cross-ownership in banking activities, ensure the rights of shareholders and limit the right to concentrate shares in a group of shareholders. Thereby, limiting the right to operate and manage group interests, affecting the interests of credit and other shareholders.
Handling weak credit institutions with special cases
Also giving comments on the draft revised Law on Credit Institutions, delegate Ha Sy Dong (National Assembly Delegation of Quang Tri Province) said that in practice, in the process of handling weak credit institutions, there have arisen special cases that are not yet regulated in the Law on Credit Institutions.
According to the delegate, studying international experience in handling recent bank failures in the US and Europe, as well as recent practices in Vietnam, shows the need to amend and supplement regulations on special loans as well as regulations on handling incidents of mass withdrawals by credit institutions in the draft Law.
Current law stipulates early intervention when a credit institution fails to maintain its solvency ratio for 3 consecutive months, fails to maintain its capital adequacy ratio for 6 consecutive months, and is ranked below average.
Delegate Ha Sy Dong emphasized that the measures applied when intervening early in the "remedial plan" only include self-remedial measures by the credit institution, such as narrowing operations, increasing charter capital, restricting transactions, cutting costs, strengthening governance... At the same time, the State Bank will stop early intervention when the credit institution overcomes the problem, or the credit institution is placed under special control.
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