Illustrative photo (Source: baochinhphu.vn) The MoF will coordinate with other ministries to set regulations oncapital increases for State-owned credit institutions, especially the Bank forAgriculture and Rural Development of Vietnam (Agribank).
The MoF will also coordinate with the State Bank of Vietnam to applyInternational Financial Reporting Standards (IFRS) in accordance with financialreporting standards in Vietnam.
In addition, it will study and develop standards for debt valuation, includingbad debts, with an aim to create a legal basis for debt valuation activities toensure objectivity in debt valuation.
Ministries and agencies will have to report their results to the MoF’sDepartment of Banking and Financial Institutions before November 15every year so the department can compile the results to send them to the SBVbefore November 30 every year.
The Government issued Decision No689/QĐ-TTg in June this year, which approvedthe project on restructuring the system of credit institutions associated withbad debt settlements in 2021-25. The project aims to create a clear and substantivechange in the restructuring of the banking system.\
Under the decision, Vietnam will reduce the number of credit institutions andbasically finish the settlement of poor-performing banks by 2025 to make thebanking system more healthy and sustainable.
The project encourages investors to participate in the purchase, sale,consolidation and merger of credit institutions voluntarily to increase thesize and competitiveness of the institutions to make the country's bankingsystem among the top four in ASEAN by 2025.
Under the project, Vietnam also targets to have at least two to threecommercial banks in the top 100 strongest banks in Asia by 2025.
The project stipulates that commercial banks' capital adequacy ratio will reachat least 10-11% by 2023 and at least 11-12% by 2025.
Large-sized banks, excluding weak ones, must have a minimum charter capital of 15trillion VND, and the number for small- and medium-sized banks will be 5trillion VND by 2025. The minimum charter capital required for financialcompanies and financial leasing companies is 750 billion VND and 450 billionVND, respectively.
For weak banks under the central bank's special control, the capital increasewill be implemented according to plans approved by the competent authority.
The project also directs the Vietnam Asset Management Company to submit tocompetent authorities for consideration a plan to increase its capital to 10trillion VND in 2022-25 to improve the financial capacity and operationalefficiency of the agency in dealing with bad debts.
According to the project, the bad debt ratio on the balance sheet of creditinstitutions, excluding those of weak commercial banks, will be less than 3% bythe end of 2025./.
VNA
