Vietnamese central bank to hold stakes in weak banks

State Bank of Vietnam will then restructure banks.

The government’s decision to allow the State Bank of Vietnam to buy stakes in specific weak banks will take effect September 20. It is part of a government plan to restructure the banking system approved in February 2012.

The plan allows SBV to purchase stakes in weak credit institutions or contribute capital to them and help them become healthier. After that, the central bank can either merge them with other credit institutions or sell those stakes to other investors.

SBV can also assign certain credit institutions to buy stakes in weak banks. These credit institutions will receive refinancing loans and special loans from the central bank.

Weak credit institutions or institutions “under special surveillance” of the state bank include those whose have accumulated debts exceeding their charter capital and other reserve funds, according to point 149 of the Law of Credit Institutions.