'Recommend the Government to soon approve the compulsory transfer plan'

Mr. Luu Trung Thai said MB has completed the plan to accept the compulsory transfer of weak banks and the proposal will be approved in the first quarter.

The proposal was made by Mr. Luu Trung Thai, Chairman of the Military Bank (MB), at the banking industry conference on January 8.

"In 2023, we coordinated with the bank under special control, helping this unit improve business efficiency, contributing to reducing accumulated losses as well as completing the business plan assigned by the State Bank," said the Chairman of MB.

Specifically, MB leaders said they had established a joint executive committee, reached a comprehensive cooperation agreement to transfer the business model, provide a syndicated loan of VND2,000 billion, and entrusted loans of more than VND60,000 billion to banks under special control. In addition, MB also supported the consolidation of information technology, built a basic technology system, and sent personnel to support this bank.

Mr. Luu Trung Thai said MB has completed the transfer plan and proposed the Government to approve this plan in the first quarter of 2024.

MB leaders today still did not mention the identity of the bank that will receive the compulsory transfer. However, in April last year, a leader of this unit revealed some basic information about the asset quality of that unit such as accumulated losses of about 20,000 billion VND, bad debt ratio of 47%. It is not excluded that this unit is Oceanbank - the bank that bought it for 0 VND with accumulated losses of nearly 20,000 billion VND.

5 banks under special control	Special control year	Accumulated loss (billion VND)
Saigon Bank (SCB)	2022	464,000
Construction Bank (CBBank)	2015	31,000 billion VND (2019)
Ocean Bank	2015	18,000 billion (2019)
Global Petroleum Bank (GPBank)	2015	N/A
DongA Bank	2015	N/A

At the conference this morning, Governor Nguyen Thi Hong also acknowledged that the valuation of compulsory transfer banks is unprecedented, but has so far been "basically completed", creating the basis for completing a detailed transfer plan in the coming time.

The mandatory transfer, according to MB's leadership, does not require the bank to spend money, because this is a weak unit in the restructuring process that was bought for 0 VND. To handle the accumulated loss of 20,000 billion VND, MB said the most important measure is the support of the State Bank. Accordingly, when MB receives the transfer, it will be able to borrow at 0% interest during the restructuring period, be allowed to grow at a higher scale, and support the receiving bank by transferring some good quality credits.

If the restructuring fails, MB cannot return the "zero-dollar bank" to the State but can sell it as an investment or IPO to become a joint-stock bank. If the restructuring is successful, the bank can merge with MB to increase MB's asset size.

Special control of banks is a professional measure to strictly control and limit negative impacts on banks and the credit institution system in general. In the history of the banking industry, there have been many banks that have been put under special control but have since recovered and developed strongly.

Quynh Trang

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