Building a restructuring plan for weak banks is very difficult.

On the afternoon of November 6, continuing the question and answer session, the three heads of banking, finance, planning and investment sectors had an additional 40 minutes to answer questions from National Assembly deputies.

Concerns about more cases like SCB bank

At the end of this morning's session, delegate Pham Van Hoa ( Dong Thap delegation) raised a sign to debate with State Bank Governor Nguyen Thi Hong.

The delegate expressed his satisfaction when hearing the Governor's answer about credit, but expressed concern that four joint stock commercial banks are under special control. "Will these banks have the same situation as SCB again, so that depositors can rest assured?", Mr. Hoa questioned and worried that "special control of some banks is very dangerous".

Finance - Banking - Governor: Building a restructuring plan for weak banks is very difficult — State Bank Governor Nguyen Thi Hong at the question-and-answer session on the afternoon of November 6 (Photo: Quochoi.vn).

Responding, Governor Nguyen Thi Hong emphasized: Building a project to restructure weak banks is very difficult and under normal conditions it is already difficult, but in the context of the economy being affected by the Covid-19 pandemic as well as fluctuations in the world economy, restructuring weak banks is even more difficult.

"The project development is difficult, complicated, and unprecedented, while the capacity of the project participants is not much. We have assessed this in the report," the Governor said.

In addition, it is difficult to find investors to participate on a voluntary basis. The policy mechanism to support this must also seek opinions from the agency level to have consensus.

“For these banks, we also asked for opinions from competent authorities and are in the process of implementing steps according to this plan before completing the detailed project to submit to competent authorities for approval and will implement in accordance with this project,” Ms. Hong added.

Lending to BOT and BT transport projects has a high rate of bad debt.

Delegate Nguyen Dai Thang (Hung Yen delegation) asked the Governor of the State Bank (SBV) about the content of transport infrastructure projects with large total investment because in addition to budget capital, other resources need to be mobilized for implementation.

However, major and key transport projects are currently mainly funded by public investment capital. One of the reasons is that mobilizing bank credit capital is still facing difficulties.

“What solutions does the State Bank have to remove obstacles and attract credit sources for investment in transport infrastructure projects in the coming time?”, Mr. Thang asked.

Finance - Banking - Governor: Building a restructuring plan for weak banks is very difficult (Figure 2). — Delegate Nguyen Dai Thang, Hung Yen delegation (Photo: Quochoi.vn).

Responding, Governor Nguyen Thi Hong said that the capital demand for transport infrastructure projects requires a very large amount of capital and a long term. The nature of the credit institution system's capital source is short-term mobilized capital, so lending in large volumes and long terms is also constrained.

Because the safety ratio in the recent operations of the credit institution system shows that if short-term capital is mobilized for medium and long-term loans, it can lead to risks and consequences for banks.

As of September 30, there were 22 credit institutions providing credit for BOT and BT traffic projects, with a total outstanding debt of VND92,319 billion. However, it is worth noting that bad debt accounts for 3.83%, and more notably, group 2 debt accounts for 26.52% - this is a debt group close to group 3 - bad debt.

The Governor stated that the reason for the increase in bad debt was that the financial plans of the projects were not in accordance with the original construction plans.

"Transportation infrastructure projects require large, long-term capital, so the mobilization policy requires both domestic and foreign sources. Bank credit capital can be lent to these projects, but operational safety must be ensured," said Ms. Hong .

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