Deputy Governor of the State Bank talks about the loan to SCB

Finalize valuation of 3 mandatory acquiring banks

At the press conference to inform about the banking performance in the first quarter of 2024, the leaders of the State Bank of Vietnam (SBV) informed about the trial of the Van Thinh Phat and Truong My Lan cases, including violations by SCB.

Deputy Governor of the State Bank of Vietnam Dao Minh Tu said that for SCB, from October 2022, if there is a liquidity imbalance, the State Bank of Vietnam has the function and the law also stipulates the terms to implement measures to stabilize the bank and ensure system safety.

In fact, SCB is not the first bank because in the past there were weak banks, some banks had to be put under special control and forced to buy. However, SCB is one of the banks with large scale and total assets, so the solution must be large enough to implement.

Mr. Tu informed that the State Bank of Vietnam continues to build a roadmap to restructure this bank step by step, urgently research, actively find mechanism solutions, create conditions for SCB to gradually stabilize, recover and operate normally.

Among the measures to stabilize SCB, there are loans from the State Bank to weak commercial banks. Money supply lending, more or less, has a tool to regulate the amount of money given through lending to SCB.

Deputy Governor Dao Minh Tu emphasized that the State Bank of Vietnam's viewpoint is that all violations were caused by individuals. The policies and regulations on lending and management of the Government and the industry are complete and clear.

Finance - Banking - Deputy Governor of the State Bank talks about the loan to SCB — Deputy Governor of the State Bank of Vietnam Dao Minh Tu speaks at the press conference.

"The violations are due to intentional wrong implementation of State regulations and must be held responsible before the law. The authorities have been and are handling the individuals involved very strictly," Mr. Tu emphasized.

According to the Deputy Governor, the function of the Government and the Central Bank of each country when commercial banks are in difficulty is to have specific and timely solutions to ensure that the bank does not collapse, causing general consequences for the financial system as well as the safety of the commercial banking system. Therefore, every country must have specific solutions.

The State Bank has completed the valuation procedure to include in the upcoming restructuring plan for the three compulsory purchase banks.

Economic credit increased by 1.34% compared to the end of 2023

Regarding the results of the first quarter, the State Bank of Vietnam said it will continue to operate monetary policy to control inflation, support economic growth recovery, promptly adapt to domestic and foreign market developments, and maintain stability in the monetary and foreign exchange markets.

Regarding interest rate management, the State Bank of Vietnam continues to maintain the operating interest rates after 4 downward adjustments in 2023 in the context of world interest rates remaining high, creating conditions for credit institutions to access capital sources from the State Bank of Vietnam at low costs;

Continue to encourage credit institutions to reduce costs to reduce lending interest rates to support the economy. Deposit and new lending interest rates of commercial banks will decrease compared to the end of 2023.

Credit in March 2024 increased positively again after decreasing in the first two months of the year due to seasonal factors. By March 29, economic credit increased by 1.34% compared to the end of 2023.

The State Bank of Vietnam flexibly manages exchange rates, contributing to absorbing shocks, combined with the issuance of VND bills to reduce excess VND liquidity, thereby reducing short-term pressure on exchange rates.

Basically, market liquidity is smooth, legitimate foreign currency needs are fully met; exchange rates fluctuate in accordance with market conditions and trends of international currencies against the USD.

For the gold market, the State Bank is implementing measures to support the gold market, selling gold bars to increase supply to the market through bidding.

Inspection and supervision of credit institutions continue to be strengthened, contributing to ensuring security and discipline in the monetary and banking markets.

The State Bank of Vietnam continues to proactively coordinate with relevant units to carry out the assigned tasks in the Action Plan of the Banking Industry to implement the Project "Restructuring the system of credit institutions associated with bad debt settlement in the period 2021-2025" under the direction of all levels. The legal framework on currency and banking activities continues to be improved .

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