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Banking interest groups exist, to be eliminated: Cbank

Banking interest groups exist, to be eliminated: Cbank

Monday, October 08, 2012, 11:00 GMT+7

Interest groups do exist in the local banking system, said the governor of Vietnam’s central bankon a recent TV program of national broadcaster Vietnam Television.

Groups or individuals have been manipulating local banks recently, a situation which can be considered clear evidence of the existence of such interest groups in the banking system, said Nguyen Van Binh, governor of the State Bank of Vietnam (SBV) on “Dialogue with the people”.

In a bank which has only one or two shareholders or a collection of dominant shareholders, about 70 – 90 percent of bank loans are set aside for these people, who form an interest group, said Binh in an 11-minute show.

“The existence of such groups is the biggest obstacle to the national banking restructuring process as they can manipulate banks and affect the whole system," Binh shared.

In addition, some shareholders have also joined forces with external business partners to distort the process of restructuring the banking system.

As a result, the SBV is determined to get rid of these groups, Binh asserted.

As the central bank governor, he admitted that the legal frameworks for the management of the banking system have not kept pace with the development of the system.

Local commercial banking activities are not yet fully monitored due to the incapable monitoring systems.

“The supervision and monitoring work is not yet as effective as expected, causing many loopholes.”

“With such a fast-growing system without any capable monitoring mechanisms, the system has proved vulnerable and the implications are seen today.”

As those groups of shareholders often use capitals ineffectively, they have caused capital losses and forced the banks to be restructured, "Binh said.

However, in addition to some banks collaborating with the SBV, there are some groups of shareholders taking advantage of their roles to cooperate with local and foreign partners to provide distorted information about the banking restructuring process.

Their purpose is to confuse the public to slow down management agencies from stepping in to handle this issue," Binh said.

Regarding the ACB incident and rumors about big bankers and related entrepreneurs spreading among the public recently, Binh said that the SBV and other state agencies have mapped out all possible scenarios and solutions for each of them.

“The public should be cautious when hearing such rumors and feel secure about the banking management and restructuring process,” Binh said.

Regarding the fight against group interests at the central bank, Binh said the Communist Party of the State Bank has conducted an in-depth review of self-criticism. "State President Truong Tan Sang has also stated that there are no interest groups in the Communist Party of the SBV or individuals in the Communist Party board of the State Bank," Binh said.

Also in the interview, SBV Governor Nguyen Van Binh said that the current difficult business situation is not due to the tightening of monetary policies.  "Our monetary policies are not tightly, but flexibly, controlled.”  “Emerging economic difficulties can be forecast beforehand as it is the price to pay to curb inflation, maintain macroeconomic stability and implement the banking restructuring process in Vietnam," Binh added.

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