The country’s biggest bank is just equivalent to a medium-sized bank in the region, he told the National Assembly that wrapped up its month-long session last Saturday in Hanoi.

National Assembly deputy Truong Trong Nghia of HCMC asked Binh whether large banks in Vietnam were at risk of collapse because the banking system restructuring plan referred largely to small and ailing banks.

Binh said Vietnam Bank for Agriculture and Rural Development (Agribank), the biggest lender in Vietnam in terms of scale and assets, is equivalent to a medium Southeast Asian bank with total assets of around US$100 billion.

As many giant banks in the world have collapsed in recent years, no credit institutions in Vietnam are strong enough to avoid risk of insolvency, Binh said.

Concerning bank profits, Binh said, it is necessary to take a proper look at the matter. If a bank has total assets of VND50-60 trillion, chartered capital from VND3-5 trillion and equity of up to several thousands of trillions of dong, an annual profit of around VND1-2 trillion is not a big figure for it.

In terms of profit, credit institutions only rank 15th among businesses in Vietnam and prices of bank stocks are lower than those of other enterprises, Binh added.

The governor called for a careful examination of monthly or quarterly profits of banks and any wide differences from the same period of last year. The real profit of a bank is the remainder after all provisions and taxes are deducted by December 31.  

The governor of the central bank during the Q&A session also said the SJC (Saigon Jewelry Company) gold brand would be put under management of the State Bank of Vietnam (SBV) and SJC brand will be later changed into SBV.

Binh said he had discussed the plan with the HCMC government to ensure the State will be the gold trading and production monopoly and this could help cut production cost.

Given concern that the plan is at the expense of other gold companies, Binh said, they will have to sacrifice for national interests and the stabilization of the macro economy.

The nation has seen wild gold price movements on world market uncertainties since 2008, which have in turn caused macro economic instability. Therefore, a draft decree on manufacturing and sale of gold will focus on management and regulation and the central bank’s monopoly is necessary, Binh said.

SJC is a unit directly under the HCMC People’s Committee and accounts for 90% of the gold market in the country.

Source: SaigonTimes.