Vietnam to restructure banking sector by 2015

Will do this to boost a slowing economy that grew at its slowest in 13 years.

The committee responsible for the restructuring will be headed Deputy Prime Minister Vu Van Ninh with State Bank of Vietnam Governor Nguyen Van Binh as his deputy. The committee will coordinate with ministries and local officials.

Prime Minister Nguyen Tan Dung last month approved a master plan to revamp the economy after the government promised to speed up overhauling banks as a slump in lending slowed domestic demand and corporate expansion. The World Bank said the stability of Vietnam’s banks is a growing concern, citing their worsening asset quality and scant progress in restructuring.

Analysts said forming such a committee will help improve the institutional coordination between government bodies that has been a serious obstacle in the restructuring process. Some, however, remained skeptical of what the committee can achieve.

The bad debt ratio at Vietnam’s banks fell to 6% of total outstanding loans as of Feb. 28 from some 8% last year after SBV requested banks to resolve the issue of non-performing loans by using their provisions for losses.

The central bank said it will put some banks under special surveillance because they risk losing payment ability or have serious violations. It will monitor the daily operations of these banks.

Vietnam’s economy grew 5% in 2012, the slowest pace since 1999. The World Bank in December forecast expansion will be 5.5% this year.