Hanoi (VNA) – All credit institutions will be subject torestructuring in the next few years, according to Nguyen Van Hung, deputy chiefinspector of the State Bank of Vietnam (SBV).

Hung said the restructuring would take place under a project on restructuringcredit institutions in association with the settlement of non-performing loans(NPLs) in the 2016-20 period, which the SBV is finalising under the directionof the Government to report to the Politburo for approval.

The SBV will formulate detailed plans and focus all its resources onimplementing the project thoroughly this year, following approval by thePolitburo and the Government, according to Hung.

All credit institutions will have to map out their own restructuring plans andsubmit it to relevant management agencies for approval before implementing theplans.

As for the three credit institutions known as “zero-dong” banks that wereacquired compulsorily by the Government, the central bank should build its ownrestructuring plans and submit it to the Politburo for approval andimplementation.

Under the project, the central bank will divide solutions to restructure creditinstitutions into three groups based on the types of credit institutions -- thegroup of State-owned banks with more than 50 percent of State ownership; thegroup of joint stock banks, finance companies and financial leasing companies;and the group of foreign credit institutions, cooperative banks, the People’s creditfunds and microfinance institutions.

Hung said restructuring measures for credit institutions are applicable to bothhealthy and weak units.

He said one of the core principles of SBV while restructuring the system was toprotect the interests of depositors. The central bank confirmed this would takeplace during the initial phase of the restructuring and would also be theprinciple throughout the coming years.

Accordingly, the methods and measures to restructure credit institutions willbe applied in accordance with the specific characteristics of each institutionand in line with the market mechanism based on the principle of being cautious,ensuring the rights of depositors and maintaining the stability and systemsecurity under the Government’s policies on restructuring the financial market,with focus on credit institutions which was stipulated under Resolution05-NQ/TW, dated November 1, 2016.

According to the central bank, the disposal of bad debts in 2017 must be linkedto the implementation of measures to prevent and minimise newly arising baddebts and credit quality improvement of credit organisations, and promotion ofthe role of Vietnam Asset Management Company in bad debt settlement to ensurethe NPL ratio is maintained at a safe and sustainable level of less than 3 percentof the total outstanding loans.-VNA