11-09-2012

Vietnam still has 3 weak banks, new report finds 

Three of Vietnam's 32 commercial banks are still facing unstable business conditions and most listed lenders are highly competitive, a new report says.

Vietbank, Western Bank, and the Mekong Development Bank have weak networks and even though their financial capacity is “acceptable,” they do not have a strong presence in the market, according to the 2012 Credit Rating of Vietnam report, which ranks the three lenders in group D.

The rest of the banks are divided relatively evenly in other groups, with 9 major lenders named in the top league.

Vietnam’s three largest partly-private banks, BIDV, VietinBank and Vietcombank, are in the A group.

The annual ratings, which were first released in 2010, are based on the assessments of top economists in the country, according to a report on the government’s website. State-owned Agribank was not rated this year.

Vietnam is in the process of restructuring its banking system. Two banking mergers have taken place since the end of last year.

Fitch said last month Vietnamese banks are still vulnerable due to their high credit-to-GDP ratio relative to many emerging markets. “This, together with broader macroeconomic vulnerabilities often found in developing markets, makes the financial system particularly sensitive to shocks,” the agency said.