Assets of state-owned banks continue to evaporate

Total assets in the banking system climbed 0.74 percent in the first two months of the year to reach VND7,370 trillion (more than $331 billion), according to a report recently issued by the State Bank of Vietnam.

While credit institutions' assets grew, state-owned commercial banks lost VND4.28 trillion (over $192 million) in assets during the first two months of 2016 to stand at $148 billion.

Ocean Bank was bought by the state for zero VND and transformed into a single member limited bank. Photo by VnExpress

Statistics for the 2015 fiscal year show a similar trend, but this happened amid general turmoil in the system, which lost 1.09 percent in total assets from both commercial banks and joint venture banks.

Joint-stock commercial banks OceanBank, Global Petro Commercial Bank (GPBank) and Vietnam Construction Bank (CB) were acquired by the state for zero VND in the first two months of 2016, and since then have been transformed into single member limited banks under state ownership.

Therefore, the burden of having to carry lesser banks on their shoulders might have contributed to the poorer financial performance of state-owned banks.

Regarding equity, the whole system increased 0.73 percent in the first two months and only commercial banks dwindled. Charter capital in state commercial banks remained the same while it rose slightly among commercial joint-stock banks.

The report also shows the ratio of short to medium and long term loans of state owned commercial banks was 33.91 percent while the ratio in commercial joint-stock banks was up to 35.85 percent.

According to a revised draft of Circular 36, commercial banks are allowed to reach a maximum of 40 percent of short to medium and long term loans.