State bank: Approving for compulsory transfer of 4 specially controlled banks

DNHN - The relevant parties are currently implementing the following contents to submit to the Government for approval of the plan to restructure these banks by the prescribed order and procedures.

In a report sent to the Economic Committee of the National Assembly at the end of April, the State Bank stated that this agency has submitted and received approval for the policy of compulsory transfer of 4 specially controlled banks, including 3 banks for compulsory purchase (CBBank, OceanBank, and GPBank) and Dong A Bank.

According to the State Bank, the following actions are being taken by relevant parties to submit to the Government for approval the plan to restructure these banks by the prescribed order and procedures.

With Saigon Bank (SCB) - a bank that has been placed under special control since October 2022 - the State Bank stated that it is conducting procedures to assess the overall situation to have a basis for building a plan to restructure this bank, and is submitting a report for approval to the appropriate authorities.

After being placed under special control for six months, the State Bank reported that SCB's operations were "under control and gradually stabilizing."

During the 2015 restructuring of the banking system, three banks, including Construction Bank (CBBank), Ocean Bank (OceanBank), and Global Petroleum Bank (GP Bank), were acquired for zero dongs. Dong A Bank came under special control the same year.

The agency stated a year ago that dealing with specially controlled banks requires finding partners, negotiating with investors who wish to participate in the bank's restructuring, and simultaneously making financial arrangements. network operation, cost reduction, and deployment of secure business activities.

Debts and accumulated losses pose the greatest obstacle when dealing with banks that have been acquired for 0 dongs for an extended period. For instance, OceanBank incurred a loss of over 17,900 billion dongs by the end of 2019. Nonetheless, over the past four years, they have steadily decreased their accumulated losses, and 2021 is the year with the lowest loss since 2016 to date. And by the end of 2019, CBBank had accumulated losses of over 31,000 billion dong. After being acquired for zero dongs, these banks received strategic and governance support from Vietcombank and VietinBank.

In his plan to restructure weak banks and the SCB, Prime Minister Pham Minh Chinh emphasized the need for transparency and the preservation of assets.

Regarding bad debt management, the management agency predicts that the bad debt ratio on the balance sheet will be 2% by the end of 2022. This rate increased to 2.91 percent by February of this year, an increase of 0.91 percent compared to the end of 2022 and nearly double the end of 2021 (1.49%).

According to the State Bank, some debts are not bad, but there is a risk of changing debt groups, such as those that are restructured and kept in the same group., invest in corporate bonds for debt restructuring or bad receivables, and withdraw accrued interest.

Taking into account these potential debts and unresolved debts sold to VAMC, the total bad debt on the balance sheet, and the bad debt of credit institutions by the end of February 2023, according to the State Bank of Vietnam, is approximately 5% of the total outstanding loans. This agency believes that these amounts should be recorded so that future solutions can be developed to manage and prevent the risk of bad debt transfer.

At the recent 2023 Annual General Meeting of Shareholders, several commercial banks that are anticipated to receive the transfer of one of the above-mentioned four banks also brought this up.

At the General Meeting of Shareholders of Vietcombank, the Chairman of the Board of Directors of Vietcombank – Mr. Pham Quang Dung – stated that Vietcombank estimated that the processing time of received banks would not exceed eight to ten years for these organizations to become healthy credit institutions and operate normally.

Mr. Pham Nhu Anh, Standing Deputy General Director of MBBank, stated: "MB is executing the procedures for the compulsory transfer of bank valuation. According to the procedure, the valuation period is eleven months, with completion anticipated by early 2024.

In response to shareholders, VPBank Chairman Ngo Chi Dung disclosed that VPBank is one of four banks involved in the restructuring of weak banks. Mr. Dung stated, however, that it is impossible to say because it depends on the approval process.

At HDBank, the bank's General Meeting of Shareholders was presented with a proposal to contribute no more than VND 9,000 billion to the compulsory transfer bank. Because HDBank is the sole owner of charter capital and is a separate legal entity from HDBank, the weak bank will operate as a one-member limited liability bank.

P.V (t/h)