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The State Bank of Vietnam will begin buying stakes in the country's weakest lenders from September, but is lacking in expertise and would do better to allow foreign investors to do the job instead.
Vietnam's central bank will start buying stakes in the country's weakest lenders from September, but commentators fear management standards could remain lacklustre in the long term, unless foreign investors help accelerate the privatisation of the sector.
Last week, Vietnam's prime minister signed Decision 48, a supplement to the 2011 Law on Credit Institutions, which reinforces the government's intention to force banks to merge or be recapitalised and sold on to stronger financial institutions.
The policy will come into effect on September 20 and only impacts banks under special supervision by the State Bank of Vietnam (SBV) - though these institutions have not been named. Commentators argue that this announcement is positive as - along with the asset management company for bad debt - will add some momentum to Vietnam's banking sector overhaul.
"This shows that some priority is being given to the restructuring process. Recently, no progress has been made. If it is further delayed, the recovery of the economy will be difficult," said Quach Thuy Linh, analyst...