As from September 20, the Governor of the State Bank of Vietnam could appoint suitable credit institutions to buy stakes in other lenders that are under special surveillance of the agency, Prime Minister Nguyen Tan Dung said in a recent decision.

The decision was issued in the context that the government is stepping up efforts to restructure the banking system, an important pillar for propping up the economy when bad debts remain one of the biggest hindrances to national economic recovery.

Dung instructed that lenders having to sell stakes would be those which suffered losses with values exceeding the values of their equities and reserve funds recorded in latest financial reports, adding that termination of their operations could endanger systematic security.

The Governor will decide how much stake credit institutions should purchase and the State Bank could itself acquire stakes in weak lenders if necessary. The central bank might support the designated institutions through refinancing loans, special loans or by loosening requirements for their operations for a certain period of time.

Divestments would occur when the weak lenders returned to normal operations or when they are acquired or merged, with central bank permission.-VNA