{"id":14483,"date":"2020-10-28T23:53:37","date_gmt":"2020-10-28T16:53:37","guid":{"rendered":"https:\/\/dongtam.mywebico.com\/?p=14483"},"modified":"2020-10-28T23:53:37","modified_gmt":"2020-10-28T16:53:37","slug":"experts-blast-vietnams-plan-to-rate-banks-performance-for-internal-use","status":"publish","type":"post","link":"https:\/\/dongtam.com.vn\/en\/experts-blast-vietnams-plan-to-rate-banks-performance-for-internal-use\/","title":{"rendered":"Experts blast Vietnam\u2019s plan to rate banks\u2019 performance for \u2018internal use\u2019"},"content":{"rendered":"<\/p>\n
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The State Bank of Vietnam wants to rate banks’ annual performance, but make the ratings known only to the credit institutions concerned, a plan experts said makes no sense.<\/div>\n
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Banks in Vietnam are to be classified into five ratings, A (Excellent), B (Good), C (Average), D (Bad) and E (Weak), the central bank said in a draft circular on conducting credit ratings for credit institutions and foreign banks.<\/p>\n

The ratings will be determined based on a set of criteria, including capital, assets, administrative management, liquidity, and business results.<\/p>\n

According to the bill, by June 30 every year the governor of the State Bank of Vietnam will approve the final ratings for banks based on the previous year\u2019s performance.<\/p>\n

However, the draft circular states that the results will not be made public on the central bank\u2019s website; instead, each of the rated institutions will be privately informed of their rating.<\/p>\n

The central bank explained that the ratings contained \u2018sensitive information\u2019 that should not be widely publicized.<\/p>\n

It also said that in other countries, the ratings of credit institutions remain undisclosed to the public.<\/p>\n

The draft regulation has sparked concern among local banking experts and customers, who wonder what the point is of rating banks and keeping the public in the dark about the results.<\/p>\n

Ratings must be publicized<\/p>\n

Nguyen Khac Quoc Bao, dean of the finance department of the University of Economics Ho Chi Minh City, said conducting credit ratings for banks and publicizing the results is common practice internationally.<\/p>\n

\u201cBank ratings are an essential means of increasing the transparency of the banking system as it allows people to understand the \u2018health\u2019 of a credit institution, particularly its risk level,\u201d Bao told Tuoi Tre (Youth) newspaper.<\/p>\n

\u00a0\u201cOnce people know the risk level of a bank, they will know where to put their money.\u201d<\/p>\n

Bao said it was understandable that the central bank wants to keep bank ratings secret for fear of rattling the market, but that seemingly cautious move would lead to problems, he suggested.<\/p>\n

\u201cWhat if the information the central bank tries to keep secret is leaked to the market?\u201d he asked.<\/p>\n

This point was echoed by Tran Minh Hiep, a lecturer from the Ho Chi Minh City University of Law. Hiep said the \u2018for internal use only\u2019 rating information, once leaked, would \u201ccause even more instability in the market.\u201d<\/p>\n

Banking expert Bui Kien Thanh said that customers need to know if a bank is ‘healthy’ before depositing money there.<\/p>\n

\u201cSimilarly, it is crucial for businesses to understand a bank\u2019s liquidity before deciding to take a loan there,\u201d he said.<\/p>\n

Bao, from the University of Economics, also underlined the necessity to rate banks and publicize the \u2018health\u2019 of credit institutions to the public.<\/p>\n

\u201cThere is a misconception that banks in Vietnam will never go bankrupt because they are all backed by the central bank,\u201d Bao elaborated.<\/p>\n

\u201cMost people will therefore care less about a bank\u2019s risk level than its interest rate offer, while there are in fact weak banks that accept deposits in high interest rate accounts only to record losses.\u201d<\/p>\n

Bao said banks should see the ratings as a motivation for them to improve their performance, rather than a \u2018sensitive thing.’<\/p>\n

\u201cAs for banks with strong performance, the ratings will be another means for them to boost their reputation and fortify their positions in the market,\u201d he added.<\/p>\n

\u201cBank ratings are a time- and money-consuming task and for no reason should the State Bank of Vietnam perform them only to keep the results for \u2018internal use only\u2019.\u201d<\/p><\/div>\n

According to Tuoitrenews.vn<\/strong><\/em><\/div>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

The State Bank of Vietnam wants to rate banks’ annual performance, but make the ratings known only to the credit institutions concerned, a plan experts said makes no sense. Banks in Vietnam are to be classified into five ratings, A (Excellent), B (Good), C (Average), D (Bad) and E (Weak), the central bank said in […]<\/p>\n","protected":false},"author":12,"featured_media":13417,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[734],"tags":[],"class_list":["post-14483","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/dongtam.com.vn\/en\/wp-json\/wp\/v2\/posts\/14483"}],"collection":[{"href":"https:\/\/dongtam.com.vn\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dongtam.com.vn\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dongtam.com.vn\/en\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/dongtam.com.vn\/en\/wp-json\/wp\/v2\/comments?post=14483"}],"version-history":[{"count":1,"href":"https:\/\/dongtam.com.vn\/en\/wp-json\/wp\/v2\/posts\/14483\/revisions"}],"predecessor-version":[{"id":15349,"href":"https:\/\/dongtam.com.vn\/en\/wp-json\/wp\/v2\/posts\/14483\/revisions\/15349"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dongtam.com.vn\/en\/wp-json\/wp\/v2\/media\/13417"}],"wp:attachment":[{"href":"https:\/\/dongtam.com.vn\/en\/wp-json\/wp\/v2\/media?parent=14483"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dongtam.com.vn\/en\/wp-json\/wp\/v2\/categories?post=14483"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dongtam.com.vn\/en\/wp-json\/wp\/v2\/tags?post=14483"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}