The State Bank of Vietnam is poised to close an unspecified number of joint-stock banks and will force the merging of several others in an overhaul of the country's struggling private-banking sector.
Vietnam's private banks - the term joint stock refers to financial institutions which are partly or wholly privately owned - remain bedeviled with problems, the most pressing of which have been identified by industry insiders as undercapitalisation and low public confidence due to corruption and mismanagement.
A Vietnamese banker with a big international financial institution in Hanoi said local banks had an average capital base of between just US$5 million and US$10 million and that, if international auditing procedures were applied, most would be declared insolvent.
The State Bank - the central bank - last year put five joint-stock banks under surveillance while others were sanctioned for lifting interest rates on lending above a ceiling imposed in a bid to mobilise about US$1.4 billion in capital which remains locked in deposits.
According to Houng Dinh Thang, deputy head of the State Bank Inspectorate, time has now run out for those banks who have failed to abide by banking regulations and improve their management performance.
'The reorganisation will include the revoking of licences for some joint-stock banks and the merging of some banks with others, while the remainder will be encouraged to improve [their performance],' he told the Vietnam Investment Review without giving specific details.
