Finance Ministry sets targets for banking system. (Photo: VNA)

The MoF will coordinate with other ministries to set regulations on capital increases for State-owned credit institutions, especially the Bank for Agriculture and Rural Development of Vietnam (Agribank).

The MoF will also coordinate with the State Bank of Vietnam to apply International Financial Reporting Standards (IFRS) in accordance with financial reporting standards in Vietnam.

In addition, it will study and develop standards for debt valuation, including bad debts, with the aim of creating a legal basis for debt valuation activities to ensure objectivity in debt valuation.

Ministries and agencies will have to report their results to the MoF’s Department of Banking and Financial Institutions before November 15 every year so the department can compile the results to send them to the SBV before November 30 every year.

The Government issued Decision No689/QĐ-TTg in June this year, which approved the project on restructuring the system of credit institutions associated with bad debt settlements in 2021-25. The project aims to create a clear and substantive change in the restructuring of the banking system.

Under the decision, Vietnam will reduce the number of credit institutions and basically finish the settlement of poor-performing banks by 2025 to make the banking system more healthy and sustainable.

The project encourages investors to participate in the purchase, sale, consolidation and merger of credit institutions voluntarily to increase the size and competitiveness of the institutions to make the country's banking system among the top four in ASEAN by 2025.

Under the project, Vietnam also targets to have at least two to three commercial banks in the top 100 strongest banks in Asia by 2025.

The project stipulates that commercial banks' capital adequacy ratio will reach at least 10-11% by 2023 and at least 11-12% by 2025.

Large-sized banks, excluding weak ones, must have a minimum charter capital of 15 trillion VND, and the number for small- and medium-sized banks will be 5 trillion VND by 2025. The minimum charter capital required for financial companies and financial leasing companies is 750 billion VND and 450 billion VND, respectively.

For weak banks under the central bank's special control, the capital increase will be implemented according to plans approved by the competent authority.

The project also directs the Vietnam Asset Management Company to submit to competent authorities for consideration a plan to increase its capital to 10 trillion VND in 2022-25 to improve the financial capacity and operational efficiency of the agency in dealing with bad debts.

According to the project, the bad debt ratio on the balance sheet of credit institutions, excluding those of weak commercial banks, will be less than 3% by the end of 2025.