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Vietnamese regulator to allow banks to declare bankruptcy

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Vietnamese regulator to allow banks to declare bankruptcy

The State Bank of Vietnam is drafting a law that would allow weak financial institutions to file for bankruptcy for the first time, Viet Nam News reported March 31, citing the central bank.

The central bank recently published the first draft version of the law and is seeking comments. The regulator is looking to have a separate law that would enhance the restructuring of banks in the next five years.

News of the central bank allowing for bankruptcy is not new. In 2016, Deputy Governor Nguyen Phuoc Thanh said that the central bank may allow banks to declare bankruptcy.

For 2017, the central bank aims to resolve cross ownership among credit institutions, said Nguy?n Van Hung, the central bank's deputy chief inspector. It also plans to handle five weak banks in 2017, including three banks — Vietnam Construction Bank, Ocean Commercial One Member Limited Liability Bank, or OceanBank, and Global Petro Commercial Joint Stock Bank, or GP Bank, — which it placed under special supervision and bought for zero dong. It may also allow some credit institutions to go bankrupt as a warning for the whole system.

As of March 31, US$1 was equivalent to 22,755 Vietnamese dong.