The recommendation was under an audit result report on the socio-economic development recovery programme recently sent to the National Assembly (NA) Standing Committee and NA delegates.

Under the report, the SAV said the plan to handle weak credit institutions, including OceanBank, GPBank and CBBank, is still slow as it has lasted for many years (since 2015).

The extension of the handling has led to an increase in the expected capital sources that have been used to aid the handling through special loan forms because the weak banks have reported consecutive losses.

By the time of the audit in August 2023, the handling of the three banks was only at the stage of the Government's approval of the mandatory transfer policy, and determining the bank value.

For DongA Bank, it must also be compulsorily transferred to another bank according to the current legal regulations because its equity is negative.

Therefore, the SAV recommended that the SBV speed up the handling of the weak banks.

According to the SAV, relevant agencies must propose monitoring and intervention measures in accordance with the provisions of law, so as to avoid losing the property of the State and people, and ensure the safety and stability of the banking system.

According to the SAV’s report, the financial situation of the banks was still very difficult. Specifically, bad debts and mortgaged assets remained high; equity was negative; accumulated losses continued to increase and failed to meet safety regulations in banking activities.

Regarding ensuring the safety of the credit institution system, audits at the SBV this year showed the liquidity of the banking system at many times during the year was ‘still tense’. Some credit institutions had a shortage of working capital, which caused them to violate the SBV’s required reserve ratio, or have to ask for large liquidity supporting loans or special loans.

The SAV’s report also showed the ratio of short-term capital used for medium and long-term loans throughout the banking system as of December 31, 2022, was 25.6 per cent, which does not exceed the SBV’s regulated threshold, but the ratio is tending to increase.

Regarding the target to cut lending interest rates by about 0.5-1 percentage points according to the NA’s Resolution No. 43/2022/QH15, the SAV reported in 2022, the SBV implemented measures to reduce lending interest rates of credit institutions. However, according to the SAV, the measures were not effective and failed to meet the target of reducing lending interest rates by about 0.5-1 percentage point. In contrast, the lending rate had an increasing trend and the margin between the average lending interest rate and the average deposit interest rate was still large at more than 4 per cent.

Besides, the SAV’s report also noted at the end of September 2022, the SBV adjusted its policy interest rates twice within a month with a total increase of 2 per cent, which caused a sudden increase in deposit interest rates and average lending interest rates throughout the banking system in the last months of 2022. At that time, the market experienced deposit interest rates of more than 11 per cent and lending interest rates of more than 3 per cent. — VNS