On October 17, the State Bank of Vietnam (SBV) announced the decision to compulsorily transfer Vietnam Construction Commercial Joint Stock Bank (CB) to Vietnam Joint Stock Commercial Bank for Foreign Trade (Vietcombank) and Ocean Commercial Joint Stock Bank (OceanBank) to Military Commercial Joint Stock Bank (MB) according to the plan approved by the Government.

The remaining "zero dong" bank, GPBank, will also be forced to transfer according to the roadmap. The State Bank of Vietnam affirmed that it will continue to exercise special control over Dong A Commercial Joint Stock Bank (Dong A Bank) and Saigon Commercial Joint Stock Bank (SCB).

In the report of the State Bank recently sent to the National Assembly, the State Bank pointed out difficulties and obstacles in restructuring the system of credit institutions (CIs) associated with handling bad debts.

According to the State Bank of Vietnam, the search for commercial banks eligible to receive compulsory transfers is long and difficult due to the large dependence on the voluntary participation of commercial banks.

Commercial banks also need time to convince shareholders, especially major shareholders and foreign strategic shareholders, to agree to participate in the mandatory transfer.

The policy mechanism and financial resources to handle weak credit institutions in general and to develop a plan for compulsory transfer of compulsory purchasing banks and Dong A Bank in particular still have many shortcomings, obstacles and lengthy procedures.

Coordination and consultation of relevant ministries and branches is still prolonged due to the unprecedented complexity of handling weak banks.

The capacity of some civil servants doing inspection and supervision work is still limited in conditions of pressure to handle large and complicated workloads, with urgent requirements on progress (both performing inspection and supervision work and restructuring weak banks).

Dong A Bank.jpg
The State Bank of Vietnam continues to exercise special control over Dong A Commercial Joint Stock Bank. Photo: Dong A Bank

The State Bank said that in the coming time, it will continue to closely coordinate with relevant ministries, branches and agencies to implement solutions to fundamentally handle weak credit institutions such as:

Resolutely implement the Project on restructuring the system of credit institutions associated with handling bad debts in the period of 2021-2025; focus on implementing the direction of competent authorities on restructuring and handling weak banks, ensuring stable operations and supporting these banks to gradually recover.

Continue to review, research, advise, amend and supplement relevant documents to complete the legal framework for implementing the Law on Credit Institutions 2024.

Direct banks receiving compulsory transfers to complete compulsory transfer plans in accordance with legal regulations and instructions of competent authorities, submit them to the Government for approval and implementation.

The State Bank also said it will focus on developing and approving projects to restructure weak banks by 2025, fundamentally handling weak banks and credit institutions, and especially not allowing new weak banks to arise.

Joint stock commercial banks are actively completing and implementing the restructuring plan approved by competent authorities.

Accordingly, basically, all commercial banks are focusing on comprehensive consolidation and rectification in terms of finance, administration and operations, in order to improve business efficiency and competitiveness.

In addition, commercial banks also actively strive to handle bad debts, strengthen control measures to improve credit quality, especially credit for areas with potential risks, develop payment services, other non-credit services and expand retail consumer credit services. Promote the development and diversification of banking services, focusing on improving the quality of traditional banking services and rapidly developing modern banking services.