On October 1, 2019 in Hanoi, the State Bank of Vietnam (SBV) and the World Bank (WB) signed a financing agreement for a grant worth US$2.2 million provided by the Swiss Government to implement the “Vietnam: Strengthening Banking Sector Soundness and Development Project”.
Attending the ceremony, on the SBV’s side, there were SBV Deputy Governor Dao Minh Tu, representatives from the Department of Legal Affairs, the Communication Department, the International Cooperation Department, the Banking Supervision Agency. The leaders and representatives of the WB Country Office in Vietnam and the Swiss State Secretariat for Economic Affairs (SECO) also attended the ceremony.
The project aims to strengthen the soundness and resilience of the banking sector by enhancing the capacity of the SBV to address structural weaknesses in the banking system. Specifically, the WB will provide technical assistance to implement reforms laid out under the Banking Restructuring Plan 2016-2020 and the subsequent 2025 Banking Sector Strategy.
Deputy Governor Dao Minh Tu
Mr. Ousmane Dione, World Bank Country Director for Vietnam said, “A healthy banking sector, which is the largest segment of Vietnam’s financial system, is fundamental to the country’s sustainable economic growth. By bringing in world-class expertise in banking sector development, we hope that we can support the SBV in successfully implementing the structural reforms they are committed to deliver”.
Mr. Ousmane Dione, World Bank Country Director for Vietnam
Challenges of the banking sector include issues of asset quality, weak capitalization and regulatory constraint, high operational costs and expenses for risk provisioning. Therefore, the banking sector is being revamped toward a more market-oriented sector, based on the international standards, and stronger financial stability monitoring.
The SBV will cooperate with the WB to strengthen the legal and regulatory framework for the banking sector, especially the Law on Credit Institutions and the implementation of Resolution No.42/2017/QH14 of the National Assembly on NPL resolution. The project will also help the SBV improve the forecasting and supervisory capabilities in line with the international standards and practices, support the development of a debt market, and build the capacity of the Vietnam Asset Management Company (VAMC) to better manage non-performing loans.
This grant is part of the broader US$8 million “Strengthening Banking Sector Soundness and Development Program” provided by SECO and administrated by the WB.
Le Hang