Ensuring the legitimate benefits for depositors during the restructuring of credit institutions was assured by Mr. Nguyen Van Hung – Deputy Inspector of the Banking Supervision Agency in the interview about the banking system's restructure process in 2017.
Reporter: It is the fact that the restructuring of the system of credit institutions has been a key task for the banking sector in recent years and during 2017. The SBV has formulated and implemented a scheme for restructuring credit institutions in close cooperation with the NPL resolution for the period 2016 – 2020. Could you talk in general about this Scheme?
Mr. Nguyen Van Hung: On the basis of the achievement of the NPL resolution and banking restructuring in recent years, together with analysing and defining the limitations and weakness of the system of credit institutions, the SBV determined this task to be one of key activities for the whole banking system in 2017. Accordingly, the SBV has formulated a scheme to restructure credit institutions in adherence with the NPL resolution for 2016 – 2020.
Recently, SBV has been updating the scheme in line with the Government's direction and the report will be submitted to the Politburo soon. Based on the approval and direction of the Politburo and Government of the plan, the SBV will set out the roadmap and concentrate resources to implement the Scheme decisively and comprehensively.
Reporter: Could you talk in more detail about the objectives of the restructuring of credit institutions and the NPL resolution in 2017?
Mr. Nguyen Van Hung: SBV defined the main objectives of restructuring and the NPL resolution as follows:
First, to continue maintaining macroeconomic stability, control inflation; to ensure the main balance of the economy; to maintain and strengthen the safety and soundness of the system of credit institutions.
Second, to improve the efficiency and effectiveness of state management, together with combating and preventing legal violations in the monetary and banking sector.
Third, to boost comprehensive restructuring in term of finance, performance and the governance of credit institutions, especially of weak institutions, with appropriate methods and a roadmap that best suits each credit institution and in line with market mechanisms.
The SBV particularly emphasised prudence in the process of restructuring to effectively protect the benefits of depositors and ensure the stability and safety of the banking system.
Fourth, to supervise and improve credit quality in combination with boosting the NPL resolution in line with market mechanisms; complete the legal framework supporting the NPL resolution and the restructuring of the system of credit institutions.
The SBV observed that the NPL resolution must be closely combined with preventative measures and eliminating the arising new NPLs, as well as increasing the credit quality of credit institutions. The role and functions of VAMC shall have to be accelerated in order to maintain NPL's at safe and sustainable levels, meaning below 3% out of outstanding loans.
Reporter: Could you talk more about the objectives of the banking restructure?
Mr. Nguyen Van Hung: They cover all credit institutions, including mandatory acquired banks by the SBV (Zero Dong Bank). In principle, the restructure might have to ensure the stability of the system of credit institutions and protect the legitimate rights and benefits of the depositors. Accordingly, the credit institutions are required to formulate and submit for approval any restructure plan and decisively implement it. For commercial banks that SBV made mandatory acquisitions of, the SBV will formulate a specific scheme and get approval from the Government to conduct the restructure.
In addition, solutions will be classified into various groups in line with the type of credit institution: such as the group of State owned commercial banks that State holds higher than 50% charter capital; joint stock commercial banks; financial and leasing companies; foreign bank branches; cooperative banks, people credit funds and micro - finance organizations.
For each group of credit institutions, the particular solutions to their restructuring will be formulated and divided into strong credit institutions and weak ones.
Reporter: In the Conference on the tasks for the banking sector in 2017, Prime Minister Nguyen Xuan Phuc instructed SBV to ensure the safety and stability of the system of credit institutions, as well as protecting the benefits of the State and depositors during the restructuring process. Can we assume this will be a core principle of the SBV as part of the restructure?
Mr. Nguyen Van Hung: Yes, you are absolutely right. One of core principle of the SBV in the restructuring process is to make our best efforts to protect the legal benefits and rights of depositors. This principle is strongly affirmed by the SBV in the whole process of restructure of credit institutions, both in the past and in the future.
Accordingly, the type and methods of restructuring will be utilized in an appropriate and prudent manner, one which best suits the practical conditions of each credit institution and in line with market mechanisms, and ensures the legal benefits and rights of depositors. The restructure methods must also contribute to stabilizing the system in accordance with the resolution No.05-NQ/TƯ dated November 1st, 2016 of CPV Committee Session XII on the financial market's restructuring.
Reporter: Thank you very much