Ailing banks allowed to go bankrupt, NA votes

The National Assembly voted on an amended version of the country’s Law on Credit Institutions on Monday.

The National Assembly voted on an amended version of the country’s Law on Credit Institutions on Monday. (Photo:

The National Assembly voted on an amended version of the country’s Law on Credit Institutions on Monday. (Photo:

With an overwhelming majority (88.8 percent), the NA passed the bill, which was amended to provide guideline for the restructure of banks and financial institutions, special control mechanisms, rehabilitation as well merge and acquisition activities.
The highlight of the new bill is that future ailing banks will be allowed to go bankrupt while several banks: CB Bank, Ocean Bank and GP Bank, purchased at zero value by the State Bank of Vietnam (SBV) and DongA Bank, which was put under special control by the SBV will continue to be restructured under previously approved plan.
In a previous discussion with NA deputies, SBV Governor Le Minh Hung said whether ailing banks are allowed to go bankrupt or not SBV’s highest priority was to safeguard the country’s financial system, the people’s trust and lawful rights of depositors.
Many deputies had voiced their concerns against policies of buying out ailing banks with State’s budget, which is ultimately taxpayers’ money, citing numerous shortcomings and uncertainties within the country’s current banking regulations.
A report by NA’s economics committee also advised against buy-out policy.
“In some cases, the situations of financial institutions are beyond saving. Rescuing them will be completely against market economy principles and burden the State with even more risks and liabilities,” said the committee’s chairman Vu Hong Thanh.
High bad debt ratio and a series of embezzelment and mismanagement scandals hit the country’s banking sector in recent years threatened its financial system’s stability and prompted the Government to perform an overhaul on banking regulations.
In a report by the SBV made public in April, the ratio of non-performing loans could amount to 8.86 percent including bad debts managed by the Vietnam Asset Management Company and debts which potentially turned into non-performing due to a shortage of mechanisms in handling bad debts and mortgaged assets.
With the outstanding loans totalling VND5.5 quadrillion (US$241 billion) as of the end of 2016, bad debts could amount to VND487 trillion.
NA deputies also discussed a draft version of the country’s Law on Surveying and Mapping with minister of natural resource and environment Tran Hong Ha.


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