The State Bank of Vietnam (SBV) is assessing the performance of Asia Commercial Bank (ACB) and 26 other banking institutions in the country in the wake of banking sector problems.
ACB and the companies that are doing business with it are under review, Dang Thanh Binh, deputy governor of the central bank.
SBV is evaluating ACB’s situation and will clarify all issues pertaining to the partner enterprises and large shareholders of the bank, Binh told a press briefing on the East Asia conference for financial stability which will take place in Hanoi from next Tuesday to Wednesday.
The central bank will handle violations of ACB, if any, Binh noted.
Vu Viet Ngoan, chairman of the National Financial Supervisory Commission, added one of the issues to be discussed at the international conference would be two kinds of risks associated with banking sector operations, namely cross-ownership risk and shadow banking.
Shadow banking, as explained by Ngoan, is banking activities which are provided by non-banking financial institutions but are not governed by any prevailing regulations.
SBV didn’t ban a bank from owning shares of other lenders as well as a shareholder from holding shares of several banks, Binh said.
However, the fact shows that shareholders of certain lenders set up subsidiaries and borrowed money from banks to invest in other banks, leading to cross ownership among members in the banking sector, he noted. This has put banking operations at stake.
“We now are making clear cross ownership of local lenders,” Binh asserted. He also revealed that the central bank will release new regulations to tackle the current shortcomings, including a legal system on cross ownership due to come out next year.
SBV Governor Nguyen Van Binh earlier told the National Assembly Q&A session that the central bank was inspecting 27 credit institutions. Numerous banks are in the hands of a group of shareholders.
(Sai Gon Times)