Economist takes dim view of Vietnam banks' bad debts

TN News

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Bad debts in the banking system last year could have been as high as US$14.3 billion or 10 per cent of loans outstanding, Tuoi Tre newspaper quoted a Standard Chartered Bank economist as saying.

Betty Rui Wang said it could not have been lower that $7.2 billion or 5 percent.

She suggested some measures to bring the bad debts down, but admitted two of them could cause resentment among tax payers.

Tightening credit could help, she said, but it would lead to falling revenues or even losses for banks, the biggest of which are state -owned.

Another solution is for the government to bail out the banks with taxpayers' money, but then it already runs a deficit, she said.

Information about the bad debts remains unclear, with central bank governor Nguyen Van Binh saying last September that non-performing loans accounted for 8.82 percent of total loans.

But many analysts and financial institutions have said they are worried it is more than 10 percent.

The central bank said in late February that bad debts were down by nearly 3 percentage point to 6 percent, crediting this to careful risk assessment by banks and making more provisions.

But critics have said bad debts cannot decrease due to these reasons.

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