Trang Chủ
Could you please evaluate the process of restructuring the banking system in Vietnam?
Dr. Dinh Xuan Thao: The banking system restructuring is an objective requirement for the economy. In recent years, the number of banks in Vietnam has considerably increased while the quality of some banks is not ensured. If the State does not have an appropriate policy on restructuring the banking system, it will cause bad consequences and affect the economy. Because of high sensitiveness and contagion of banking activities, only one failed bank can affect the whole system. At the same time, in terms of market principles, the banking system restructuring is also to purge weak banks, even accept the bankruptcy of weak banks.
As a representative of the people, what are people most concerned about when banks are restructured?
Dr. Dinh Xuan Thao: Besides interest rates, people are interested in the safety of their deposits when depositing money in banks, thereby, they observe and study the Government’s policies on protecting the depositors. Therefore, maybe the issue about which people are the most concerned is the depositors’ confidence in the banking sector when the State restructures the banking system.
In your opinion, which conditions should be necessary for well restructuring banks in terms of institution?
Dr. Dinh Xuan Thao: In order to well restructure the banking system and ensure the interests of the parties, there are three issues to be concerned about and clearly clarified:
Firstly, we need to create a legal framework for appropriate adjustment. The goal of restructuring is to make the banking system operate more healthily and effectively. In terms of legislation, we need to perfect the law on bank dissolution or bankruptcy. Bank is also a type of enterprise. However, the bank failure is associated with multiple entities and even the economy. Therefore, there should be regulations on ensuring transparency, clearly defining responsibilities of the parties in the process of bank dissolution, bankruptcy. In particular, it is necessary to pay attention to limiting the use of state budget to resolve bank failure.
Secondly, building up the institution is very necessary to protect the rights of people, thereby institutionalizing the functions and tasks of the agencies in the national financial safety net including the State Bank, the Ministry of Finance, the National Financial Supervisory Committee and the Deposit Insurance of Vietnam. It is of vital importance to develop policies on protecting people's deposits through the Law on Deposit Insurance such as increasing the deposit insurance coverage, strengthening DIV’s examination function, risk supervision, financial capacity and the responsibility for restructuring the banking system including participation in the failure resolution process. These issues should be considered and put into Law on Deposit Insurance.
Thirdly, it is crucial to determine the scope of restructuring. Does the banking system restructuring consist of only commercial banks or include commercial banks and the central bank as well as other agencies in the financial safety net such as the deposit insurer? I think that it is essential to consider the central bank, the deposit insurer and commercial banks. Due to the innovative system of state management agencies and public policy implementation authorities, the result of restructuring can be sustainable.
How do you think DIV plays a role in the process of restructuring the banking system?
Dr. Dinh Xuan Thao: DIV is a financial institution that maintains public confidence through the role of depositor protection and contributes to ensuring the safe and sound development of banking system. According to the international experience, the deposit insurer participates in the process of restructuring the banking system by performing functions of acquisitions, mergers and smooth resolution of weak banks without causing major disruption in the market. Many deposit insurers in the Asian region such as Indonesia, Korea, Taiwan, etc. also participate in the banking system restructuring because the rule for limiting the use of state budget will be well obeyed.
