Mergers and acquisitions (M&A) within the Vietnamese bankingindustry have contributed to the sector's restructuring in recent years,but experts are suggesting that big banks get involved in the process.
TruongThanh Duc, Chairman of the Vietnam Banking Association's Legal Club,said banking reform in the past two years has yet to provide theexpected outcomes.
Eight or nine weak banks were approved forrestructuring through mergers with other banks, but their merger plansare viewed as temporary and not the optimum solution, given their weakperformance following the mergers.
Banking system indicatorswhich reflect financial strength, including capital adequacy ratio,non-performing loans, risk management system and corporate governance,have not improved greatly compared with those recorded 10 years ago.
Ducsaid big banks' involvement in M&A with weak banks would help raisethe quality of restructured banks, but added that this process be donevoluntarily.
He also proposed that banks found to be too weakfor restructuring be allowed to go bankrupt or be dissolved while thestronger banks be restructured to serve various customer groups.
TheThoi Bao Kinh Te Vietnam newspaper (Vietnam Economic Times) also quotedDuc as saying: "It's important to have good management and supervisionpolicies to ensure the safe and effective operation of the bankingsystem."
Nguyen Tri Hieu, a banking expert, expressed worriesthat M&A involving the biggest banks could reduce competitiveness inthe market, as these banks could use their strong financial capacity,as well as preferential Government policies and dominating marketposition, to squeeze smaller banks.
However,Hieu also agreed that the participation of big banks in M&A wouldbring better results for small banks and benefit the entire system.
Inthe first half of this year, numerous banks revealed their M&Aplans, including small banks such as Southern Bank, DongA Bank, PG Bank,and VietA Bank, as well as big banks such as Sacombank and Eximbank.
Thecentral bank expects to reduce the number of banks to about 20 to 25 byspeeding up the restructuring process with more M&A deals nextyear.-VNA
TruongThanh Duc, Chairman of the Vietnam Banking Association's Legal Club,said banking reform in the past two years has yet to provide theexpected outcomes.
Eight or nine weak banks were approved forrestructuring through mergers with other banks, but their merger plansare viewed as temporary and not the optimum solution, given their weakperformance following the mergers.
Banking system indicatorswhich reflect financial strength, including capital adequacy ratio,non-performing loans, risk management system and corporate governance,have not improved greatly compared with those recorded 10 years ago.
Ducsaid big banks' involvement in M&A with weak banks would help raisethe quality of restructured banks, but added that this process be donevoluntarily.
He also proposed that banks found to be too weakfor restructuring be allowed to go bankrupt or be dissolved while thestronger banks be restructured to serve various customer groups.
TheThoi Bao Kinh Te Vietnam newspaper (Vietnam Economic Times) also quotedDuc as saying: "It's important to have good management and supervisionpolicies to ensure the safe and effective operation of the bankingsystem."
Nguyen Tri Hieu, a banking expert, expressed worriesthat M&A involving the biggest banks could reduce competitiveness inthe market, as these banks could use their strong financial capacity,as well as preferential Government policies and dominating marketposition, to squeeze smaller banks.
However,Hieu also agreed that the participation of big banks in M&A wouldbring better results for small banks and benefit the entire system.
Inthe first half of this year, numerous banks revealed their M&Aplans, including small banks such as Southern Bank, DongA Bank, PG Bank,and VietA Bank, as well as big banks such as Sacombank and Eximbank.
Thecentral bank expects to reduce the number of banks to about 20 to 25 byspeeding up the restructuring process with more M&A deals nextyear.-VNA
