LENDING & CREDIT | Roxanne Uy, Vietnam

Is forced bank restructuring the solution to Vietnam's worsening NPL ratio?

Reports say Vietnamese banks' NPL ratio reached 60% - how can banks overcome this?

The Vietnamese banking sector (specially the private banks) is quite fragmented with poor transparency and weak corporate governance, notes Mark Young, Managing Director, Head Asian Pacific Financial Institutions at Fitch Ratings.

"If problems in the banking sector escalate significantly, the authorities may resort to forced restructuring - specially the smaller private banks - in order to minimise systemic risk as was witnessed during the Asian crisis in countries like Indonesia, Malaysia and Thailand. But this will happen only if problems escalate multi-fold from where we are now," Young adds.

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