Restructuring the banking sector through mandatory transfers

DNHN - The State Bank of Vietnam (SBV) has decided on the mandatory transfer of Vietnam Construction Bank (CB) and Ocean Commercial Bank (OceanBank) to Vietcombank and Military Bank (MB), respectively.

This mandatory transfer is a measure outlined in the Law on Credit Institutions to address the weaknesses of commercial banks. In recent years, CB and OceanBank have operated under a "zero-dong" model, meaning they lacked financial autonomy and struggled to attract customers. Therefore, this transfer not only aims to improve the financial situation of these two banks but also creates opportunities for Vietcombank and MB to expand their operations.

The mandatory transfer of CB to Vietcombank and OceanBank to MB is not merely a financial transaction. It is part of the government’s long-term strategy to strengthen the financial health of the banking system, creating a more robust and sustainable financial environment.

For Vietcombank, the acquisition of CB opens up numerous development opportunities. First, it allows the bank to expand its business scale and strengthen its customer network. Owning a subsidiary bank enables Vietcombank to not only increase the volume of transactions but also enhance its competitive position in the market.

However, Vietcombank also faces the reality that CB is still dealing with cumulative losses. The bank has asserted that it will not inject capital into CB until the latter's financial situation improves. This could place significant pressure on Vietcombank to implement effective support measures and manage CB efficiently.

MB is equally significant in the process of acquiring OceanBank. MB has pledged to utilize all resources to support OceanBank’s sustainable development. Appointing Mr. Lê Xuân Vũ, who has nearly 30 years of experience in the banking sector, as the permanent Deputy General Director of OceanBank is a strategic move. Mr. Vũ will be responsible for enhancing OceanBank’s management and operations, ensuring that the bank runs efficiently and makes a positive contribution to the economy.

MB has affirmed that the legal rights of depositors and customers at OceanBank will be guaranteed, which not only helps maintain customer trust but also ensures stability in the bank's operations.

Despite numerous opportunities, both Vietcombank and MB will face significant challenges. Improving the financial situation of CB and OceanBank is not an easy task. Both newly acquired banks will need effective restructuring strategies to overcome cumulative losses and enhance their operational capacity.

Additionally, ensuring the rights of depositors and customers during the transfer process is crucial. There needs to be transparency and clarity in the procedures to build customer trust and avoid public anxiety.

Mandatory transfers are not just a temporary solution but also part of a long-term plan to consolidate Vietnam's banking system. Vietcombank and MB have the opportunity not only to revive and develop CB and OceanBank but also to experiment with new business models and enhance competitiveness in an increasingly fierce market.

Collaboration among major commercial banks like Vietcombank and MB, along with the support of the SBV, will establish a solid foundation for the sustainable development of Vietnam's banking sector. This benefits not only the banks themselves but also the national economy, contributing to improved financial efficiency and system security.

The mandatory transfer of CB to Vietcombank and OceanBank to MB is a crucial step in restructuring Vietnam’s banking system. The opportunities and challenges these two banks face will determine not only their future but also have a significant impact on the entire sector. With support from the SBV and relevant authorities, it is hoped that both Vietcombank and MB will succeed in restoring the operations of CB and OceanBank, contributing to the sustainable development of Vietnam's economy.

Nghe Nhan