Vietnam takes stronger stance against banking reform evaders

          A man on a bicycle rides past the State Bank of Vietnam in Hanoi. Photo by Reuters

Banking bigwigs are going to have to show how they got so rich in the first place.

Vietnam is planning to introduce a law that requires large shareholders in privately-owned banks to disclose their assets and incomes to prove they are in a financial position to own stock.

The move is an aggressive signal that the Vietnamese government is seeking ways to clean up a banking system saddled with Southeast Asia’s highest ratio of non-performing loans.

Bad debts have been a burden on Vietnam’s economic growth since 2012 when total non-performing loans, mostly in the real estate sector, reached VND280 trillion ($12.5 billion), equivalent to 11 percent of gross domestic product.

State Bank Governor Le Minh Hung has vowed to crack down on abuse of power and stock manipulation by groups of large shareholders at banks.

“We will be introducing stricter regulations requiring bank chiefs to disclose how they have financed their stock ownership,” Hung said at a recent meeting in Ho Chi Minh City. “They could be banned from joining a board of executives for life if they are caught breaking the law.”

The central bank has already nationalized troubled lenders Global Petro Bank, Vietnam Construction Bank and Ocean Commercial Bank for failing to restructure.

“I believe that the plan will provide us with the proper tools to keep these banks under control and restore the people’s confidence in the banking system,” said the governor.

By VnExpress