RETAIL BANKING | Cesar Tordesillas, Vietnam

Vietnam to get rid of banking interest groups

The governor of Vietnam’s central bank revealed that there are groups or individuals manipulating local banks.

In a bank which has only one or two shareholders or a collection of dominant shareholders, about 70 – 90 percent of bank loans are set aside for these people, who form an interest group, said said Nguyen Van Binh, governor of the State Bank of Vietnam.

Binh explained the existence of such groups is the biggest obstacle to the national banking restructuring process as they can manipulate banks and affect the whole system.

In addition, some shareholders have also joined forces with external business partners to distort the process of restructuring the banking system.

As those groups of shareholders often use capitals ineffectively, they have caused capital losses and forced the banks to be restructured, "Binh said.

However, in addition to some banks collaborating with the SBV, there are some groups of shareholders taking advantage of their roles to cooperate with local and foreign partners to provide distorted information about the banking restructuring process.

Their purpose is to confuse the public to slow down management agencies from stepping in to handle this issue," Binh said.As a result, the SBV is determined to get rid of these groups, Binh asserted.

He admitted that the legal frameworks for the management of the banking system have not kept pace with the development of the system. 

“The supervision and monitoring work is not yet as effective as expected, causing many loopholes,” he said. “With such a fast-growing system without any capable monitoring mechanisms, the system has proved vulnerable and the implications are seen today.”

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