Capital requirements aim to protect banking system

Hanoi (VNA) - As many as 21 joint stock and five joint-venture banks may be forced to raise their charter capital to at least 2 trillion VND (113 million USD) by the end of this year.

The State Bank of Vietnam (SBV) has proposed the figure to the Government as
a way to ensure the 26 banks have the 3 trillion VND (169.5 million USD) of
charter capital they will be required to hold by the end of 2010.

Approval will enable the central bank to act against those which fail to
raise the money.

The suggestion is part of a plan drafted by the SBV to ensure the
sustainable development of the domestic banking system.

The central bank has been collecting public views as to what to do about the
country's struggling banks since late February.

As a result, poor-performing credit institutions seem destined to merge,
liquidate or be acquired by the central bank if their possible collapse was
to threaten the banking system.

The goal of the draft plan is to establish safer, better-performing
larger-scale credit institutions that accord with the trend to global
integration.

It deals with mergers and acquisitions of State-owned banks, joint-stock
banks, joint venture banks, foreign banks and cooperative banks.

Up to nine small banks which were in danger of closure late last year
because each had a charter capital of less than 1 trillion VND (57.47
million USD) have managed to raise enough money to stay open.

Vietnam has 40 partially privatised and joint-stock banks, four
State-owned banks; one bank for social policies; one for development; two
wholly foreign-owned banks; five joint-venture banks and about 40
foreign-owned banks offices.

One institution provides deposit insurance.

Three foreign banks have been granted licenses and are expected to debut
as wholly foreign-owned banks this year.-Enditem