Banking system crucial to economy: official

Hanoi (VNA) - The banking system and operations of credit institutions are crucial to the nation's economy, according to an official.

The statement was made by Nguyen Kim Anh, Deputy Governor of the State Bank of Vietnam during a conference, held in Hanoi on April 11, to implement the banking sector's action programme and development strategy.

All the viewpoints, objectives, missions and solutions mentioned in the strategy will be the guideline for all activities, both State management and business activities of credit institutions, ensuring comprehensive development, opening a new fruitful development period for the banking industry, Anh said.

Under the strategy, the overall objective of the banking industry by 2025 is to modernise the State Bank and develop the credit institutions system.

For commercial banks, initially the goal of the banking sector is to restructure the credit institutions system, handle bad debts, ensure depositors' rights and maintain system stability.

By 2020, at least 12-15 commercial banks will be required to have successfully adopted Basel II, a set of banking laws and regulations issued by the Basel Committee on banking supervision to enhance competition and transparency and make banks more resistant to market changes. At least one or two banks are hoped to be named in Asia's list of top 100 largest banks in terms of assets by the year.

In terms of operation, the first stage, the banking sector aims to increase the proportion of non-credit service income in total earnings to 12-13 percent, and gradually raise it to 16-17 percent. The sector also expects to complete the listing of commercial banks on the stock market and to cut the bad debt ratio to below 3 percent.

Vietnam aims to have at least two or three banks in Asia's top 100 largest banks in terms of assets by 2025.

In the second stage, the goal of the sector is to improve competitiveness, transparency and compliance with international standards and practices.

By the end of 2025, the banking sector targets to have at least three to five banks listed on foreign stock markets.

Also in the second stage, all commercial banks will have to apply Basel II. Basel II is also expected to be piloted at State-owned banks and some joint stock banks.

At the conference, Nghiem Xuan Thanh, Chairman of Vietcombank Board of Directors, said that to accomplish these goals, the management agencies must develop support solutions, with increasing capital being the biggest issue.

The need to increase charter capital is "extremely urgent", Thanh said.

To ensure the operation according to international practices and maintain the momentum of growth, raising capital is crucial to commercial banks, especially banks backed by the State, he said.

Regarding piloting Basel II, he said that the central bank should provide clear guidance for banks to help them apply Basel II standards quicker. - VNA