Reality can hardly demand banking systems to be transparent.

DNHN - Dr. Ho Quoc Tuan stated that because banking is a specialized field, it is difficult to demand transparency in the banking system. This is the "heart" of the economy, so when it becomes congested, the amount of capital will remain stagnant.

The bank's board of directors must have primary responsibility for supervision.

 During the talk show titled "The nature of cross-ownership: Is the bank in the hands of a "boss"?," Prof. Dr. Tran Ngoc Tho of Ho Chi Minh City University of Economics stated that our country has not yet resolved the issue over the past decade. The bank's cross-ownership structure.

"It is evident that lending within or within the ecosystem completely increases virtual capital, which is detrimental to the economy, especially in pushing up real estate prices and inflating the bubble of fixed assets. Mr. Tho stated that the high risk created a hidden possibility in the financial statements.

According to Dr. Le Dat Chi - Ho Chi Minh City University of Economics, the Law on Credit Institutions places restrictions on lending to companies affiliated with bank owners. However, it is nearly impossible for the State Bank (SBV) to supervise and enforce the loan limit provision in a group of affiliated companies. This is made more difficult when these companies are established without the legal pedigree, such as son-in-law, daughter-in-law, brother-in-law, etc.

According to experts, the "big guys" split their ownership to circumvent the ownership limitation regulations of the law, avoid the issue of information disclosure on the stock market, and simultaneously profit from their share capital. When this ownership right has not been used to borrow capital and conduct business, this share capital may be used to do so.

As a result, he stated that the Law on Credit Institutions must also establish criteria for nomination and reveal the identities of groups of shareholders who nominate members of the bank's Board of Directors to assist in the election of members. A bank's board of directors consists of an expert who represents the public shareholders, rather than a group of bank owners so that shareholders and the market can monitor the bank with greater transparency. Okay.

In addition, he suggested that the regulator enact a legal provision that serves as a deterrent to the first supervisory responsibility of the bank's board of directors to avoid "distractions" in their work, to reduce the risk associated with decisions to use the bank's capital, such as granting credit or lending to other businesses.

Data requires the coordination of numerous parties.

According to Dr. Ho Quoc Tuan, Lecturer at the University of Bristol (UK), many countries around the world have separated the role of the central bank from the safety model of the financial system. In the United States, the US Federal Reserve does not directly deal with risky banks, but the FDIC does. Even though the Bank of England buys bonds, when there is a problem in the bond market in the United Kingdom, one of the supervisory organizations is an independent organization like the Financial Conduct Authority (FCA).

"The ultimate objective of constructing a monitoring and transparency model is to obtain the data necessary to reveal the relevant companies and individuals involved. Once they have these data, the company that sells the data will be able to model or even create a person's company genealogy," Dr. Ho Quoc Tuan explained.

The expert suggested that transparency necessitates the coordination of numerous parties, ranging from the reporting regulations of the authorities to the banking supervisor's need for information. This information is not for them to keep to themselves, but they must make it available to all markets and regulators so they can jointly monitor it. From there, it is simple to determine who owns how much.

The expert also discussed the press agency's role in information transparency. Therefore, when the press agency suspected and heard a story about a bank owner lending capital, but lacked proof, they were unable to publish it. Consequently, if they possess the data, they will use it as evidence and write an article to alarm the entire market. When these analyses are published, the regulator will take note and dispatch auditors to determine what is occurring.

Dr. Ho Quoc Tuan concluded that for the banking system to be transparent, independent agencies that do not participate in banking operations must be established first. This independent oversight agency must collaborate with the Tax Authority and the Securities and Exchange Commission to request the reporting of businesses that are a part of the bank's friendly business ecosystem. From there, synthesize the report's information for market announcement and joint monitoring.

It is difficult to demand banking system transparency.

However, Dr. Ho Quoc Tuan acknowledged that it is difficult to demand transparency in the banking system due to the unique nature of the banking industry. This is the "heart" of the economy, so if it becomes too congested, the amount of capital will stagnate, so this is something to consider. This story concludes that although a management role is required in risky banks if it goes too far in its pursuit to eliminate all risk, the banking system will become "too boring" and cease to function. This may be optimal for the economies of some nations, but it can be problematic for developing nations like Vietnam.

"Risk reduction is limited and cannot be eliminated. Therefore, bankers should consider sanctions corresponding to each level of risk restriction," said the expert.

So why is transparency necessary?

According to Dr. Le Dat Chi, a Vietnamese bank serves both retail and investment banking functions. Accordingly, banks also own more securities companies to perform certain tasks and to increase the "huge" capital of securities firms. There are numerous securities firms in Vietnam with bank-sized capital, but market oversight for securities firms is still inadequate.

Therefore, it is challenging for a bank examiner to perform both functions simultaneously.

If the bank has an investment function, either a fund management company must receive the bank's capital to manage the investment portfolio, or the fund management company must be transparent about its investment portfolio to increase the balance sheet's transparency. To make more accurate provisions, the bank's capital adequately reflects the risk level, from which losses can be calculated.

It is necessary to classify risk classes in the notes to the bank's financial statements so that investors can understand which types of risky assets comprise the bank's total assets and which classes can lend how much money. not only divide debt into groups 1,2,3,4 and 5. "This is transparency so that we can view it in moderation," he stated.

Nguyen An (General)