The goal of the next seven years is at least two to three Vietnamese banks entering the Asia’s Top 100 and three to five banks listed on foreign stock exchanges.
In the morning of April 11, the State Bank of Vietnam (SBV) organised a conference to activate the banking sector’s action programme, implementing the industry development strategy until 2025 and orientation to 2030.
According to deputy Governor Nguyen Kim Anh, the banking sector’s development strategy clearly stated the view of the government that the monetary system, banking and credit institutions are the lifeblood of the economy, keeping a key role in the overall financial system.
The overall objective of the banking industry by 2025, with a vision to 2030, has two levels: modernising the SBV and developing the system of credit institutions. The action programme is divided into three periods 2018 to 2020, 2021 to 2025, and 2026 to 2030, including 7 goals and 11 task groups.
Particularly for commercial banks, the goal of the banking sector in the first stage is to restructure the system of credit institutions, thoroughly handle bad debts according to an appropriate mechanism ensuring the principles of prudence, depositors’ rights, and system stability. According to the plan, at least 12 to 15 commercial banks will have successfully adopted Basel II under the standard method, and at least one to two banks will be in the Asia’s top 100 largest banks in terms of total assets by 2020.
In terms of operation, the first phase aims to increase the proportion of non-credit service income in total income to 12 to 13 percent, and gradually to 16 to 17 percent at a later stage. It is also expected to complete the listing of shares of joint stock commercial banks on the stock market, bringing the bad debt ratio to below three percent (including internal debts, debts sold to VAMC and classified debts).
In the second phase, the goal of the system is to improve competitiveness, transparency and compliance with international standards and practices. The banking system targets at least two to three banks will be among the largest banks in Asia and three to five banks will have been listed on foreign stock markets by the end of 2025.
All commercial banks in the second phase will have to apply Basel II under the standard method. The operator also expects to pilot the application of Basel II under the advanced method at state-owned banks and joint stock banks with good governance.
Presenting at the conference, Nghiem Xuan Thanh, Chair of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), said that the management agency, in order to accomplish these goals, needed to develop support solutions, in which the capital increase problem was the most difficult.
The increase in charter capital, according to the head of Vietcombank, is ‘extremely urgent’. To ensure the operation according to international practices, maintain the momentum of growth in the coming period, it is very important to increase capital base of commercial banks, especially banks with state capital. However, according to the Chair of Vietcombank, the SBV, the Ministry of Finance and related agencies have studied this issue but have not agreed to any specific solution.
Besides, regarding the goal of having two to three banks in the group of Asia’s largest banks, Vietcombank’s Chair proposed to add other approval criteria such as equity and profit to ensure a comprehensive overview. Regarding the goal of piloting Basel II under the advanced method, Thanh suggested that the SBV should provide guidance information for banks that have met Basel II under the standard method to carry out.
