SBV sets sights on Vietnam’s bad debts

The Government of Vietnam has targeted to cut bad debts in the banking system to the international criteria of less than 3% by 2015, an official has said.

The SBV claimed bad debts falling

Nguyen Van Binh, Governor of the State Bank of Vietnam (SBV), confirmed this at a National Assembly’s meeting on October 30.

Bad debts vary

Binh said that, due to different accounting methods, the calculation of bad debt has varied. He added that bad debts have had an effect on the macroeconomics of the country, even though they have gone down on paper since June of this year.

“Even though these debts are in the financial sector, they affect the whole economy. For that reason, the responsibility falls on all of us,” he said.

Concerning one proposal to guarantee large inventories, Binh said that this was not feasible, adding that the inventory of any company had to do with existing contracts.

Restructuring weak banks

The SBV claimed bad debts falling

The SBV has also been stepping up their implementation of the banking restructure plan, already approved by the Government.

In order to deal with weak banks, several measures would be applied, including merging, supporting liquidity and issuing new regulations for the banking system, he said.

The Government has already set up an interdisciplinary steering committee, headed by a deputy prime minister, which includes the input of the governor of SBV, as well as representatives from ministries and agencies to settle bad debts, he added.

“Dealing with incompetent banks is a bit sensitive and may lead to disputes. In order to get the accurate data that is needed for meaningful restructuring, the SBV will have to carry out close inspections and auditing processes,” he said.

He added that the SBV has inspected 26 banks since the beginning of this year, and the results will soon be made public.

Vietnam targets to lower bad debts to less than 3% by 2015.

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