Vietnam urges banks to merge, become more competitive
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The Vietnamese government is urging banks to merge and increase their scale toward becoming more competitive. It wants to make Vietnam an ASEAN leader in the banking sector.
The government wants banks to have a capital adequacy ratio of at least 10-11 percent by 2023, and 11-12 percent by 2025, according to a recent plan to restructure credit organizations and handle bad debts during the 2021-2025 period.
The capital adequacy ratio is a measure of how much capital a bank has available to handle a certain amount of loss before facing the risks of becoming insolvent.
The government has said it wants Vietnam’s banking sector to become a top four leader in the ASEAN bloc. It has asked banks to make plans to increase their charter capital and improve their management.
Big banks should have a minimum charter capital of VND15 trillion by 2025, and small and medium banks, VND5 trillion, it said.
The government also wants banks to have a bad debt ratio of under 3 percent by 2025.
Vietnam has 31 domestic commercial banks, with the biggest in terms of charter capital being state-owned lenders BIDV, Vietinbank and Vietcombank, according to the State Bank of Vietnam.
Questions & Answers
Q.What specific financial targets has the Vietnamese government set for its banks?
What specific financial targets has the Vietnamese government set for its banks?
The government wants banks to achieve a capital adequacy ratio of 10-11% by 2023, increasing to 11-12% by 2025. They also aim for a bad debt ratio under 3% by 2025.
Q.What are the minimum charter capital requirements for Vietnamese banks by 2025?
What are the minimum charter capital requirements for Vietnamese banks by 2025?
By 2025, big banks should have a minimum charter capital of VND15 trillion. Small and medium banks are expected to meet a minimum charter capital of VND5 trillion.
Q.What is the ultimate goal for Vietnam's banking sector within the ASEAN region?
What is the ultimate goal for Vietnam's banking sector within the ASEAN region?
The Vietnamese government's ultimate goal is for the country's banking sector to become one of the top four leaders in the ASEAN bloc, showing increased competitiveness and scale.
Q.Which are currently the largest state-owned banks in Vietnam by charter capital?
Which are currently the largest state-owned banks in Vietnam by charter capital?
According to the State Bank of Vietnam, the largest state-owned lenders in terms of charter capital are BIDV, Vietinbank, and Vietcombank. Vietnam currently has 31 domestic commercial banks.