1. Cross-banking ownership in Vietnam has existed for many years
Cross-ownership in Vietnam has been going on for many years… To the extent that it can be considered a “historic” issue. Cross-ownership is the fact that a number of subjects own shares directly or indirectly from 02 or more banks or each other’s shares. Overall, cross possession is a moving, even stealthy target. Bankers can split shares into pedigrees. Even though they only hold 1% of the shares, they can still control the bank easily.
A look at cross-ownership in the Italian banking system from 1993 to 2001. Since 1993, the Italian State Bank has sold shares to strengthen the national credit sector. By the end of 2001, the state only held about 0.1% stake in the banking sector. The process of selling state shares is done through closed negotiations to determine specifically which group controls the shareholders. At the same time, along with consolidation, mergers associated with large banks have resulted in some shareholders owning shares of most large banks. This has created the labyrinth of cross-ownership in the Italian banking system.
Vietnam may face a situation affected by cross-banking like Italy. This is a matter of great concern because of the consequences it can bring such as:
– May interfere with competitiveness, affect the allocation of property ownership;
– Largely related to the main founders of the bank. For various reasons, they cannot ensure effective bank governance.
2. The National Assembly of Vietnam is determined to end cross-banking ownership
The Law on Credit Institutions Project is one of the projects to amend the Law that is being discussed in recent days. Accordingly, cross-ownership is a matter of concern with many recommendations and solutions raised. The recommendations from the experts are mainly on the following issues:
– Need to reset the inspection and supervision model of credit institutions. There should be an independent banking and credit inspection and examination agency. With this recommendation, banks do not necessarily reduce their shares but still manage;
– It is necessary to add specific regulations on the time limit and the corresponding plan for the case that credit institutions cannot recover after the time limit being placed under special control. This recommendation is to completely deal with weak credit institutions;
– Adding regulations to strengthen the role of the state. This will limit the abuse of major shareholder rights, management and executive rights to manipulate the activities of credit institutions;
– Supplementing solutions to limit law evasion, holding shares in the name of a joint-stock company, creating a group of large shareholders to run credit institutions.
On the basis of the above recommendations, the State Bank of Vietnam affirmed that the draft Law on Credit Institutions is designed to combat manipulation and cross-ownership.
(Refer to Tien Phong newspaper dated 12/6/2023)
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