Speaking to the Saigon Times daily, However, the SVB Governor added that putting this strategy into effect will take time.
Respondingto questions on speculations about mergers and acquisitions (M&As)amongst medium-sized commercial banks this year, Binh said it was stilltoo early to confirm these rumours because the central bank mustevaluate every step in the process and the ruling stakeholders must findthe M&A necessary and voluntary.
“My strategy is to catch the mouse without breaking vases,” Binh stated.
Thisyear, the SBV will keep pinning weak credit institutions, but marketwatchers doubted there would be an increase in M&A activity betweennow and 2017.
Economist Bui Kien Thanh told Ho Chi Minh City Lawnewspaper: “It’s quite easy for a credit institution to pay 3 trillionVND (136.36 million USD) to buy out another one. The important questionis whether the buyer would be ready to carry the large bad debt of 30trillion VND (1.36 billion USD) (that it would then acquire).”
Ina determined attempt to restructure the system and improve itsprovisions, the central bank also wants Circular 02/2013/TT-NHNN on debtclassification to gain approval on June 1 this year.
Binh said that the revised circular will be issued in the coming days, noting that the amended clauses were only technical.
Therevision was done to make the new debt classification better suit theoverall situation while ensuring reasonable efficiency, remarked thegovernor, adding that the central bank would strictly follow thedirection to restructure the system.
Circular 02 strictlyregulates asset classifications, the levels and methods of riskprovisioning and the use of provisions to handle risks in the operationof credit institutions and the branches of foreign banks.
Earlier,leaders of some banks voiced their view that the application ofCircular 02 in June 2014 means businesses would continue to be tied upand massive bad debts would be incurred.
Some rating agencieshave recognised that the Vietnamese government has taken steps tostabilise liquidity in the banking sector, which have made the risk of asystemic crisis more remote.
However, for example, S&P notedthat they were expecting more regulations to be placed regarding thesettlement of non-performing loans.-VNA
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