SAV holds seminar on bad debt and cross ownership in Hanoi

On 18 September 2017, a seminar on Bad debts and Cross ownership in Financial Institutions was held by SAV in Hanoi. The event came out as a result of joint efforts by Specialized Audit Department VII and Audit Training Institute (ATI). It was co-chaired by Mr. Pham Thanh Son, Director General of SAD VII and Mr. Nguyen Dinh Hoa, Deputy Director General of ATI.

Bad debts and cross ownership get serious concerns not only from financial institutions but also from SAV management. They are seen as major factors obstructing the current Vietnmese economic development. On realizing the importance of assessing banking re-structuring and bad debts management, the seminar participants focused their discussions on exchanges of professional experiences among auditors and financial and banking managers. It was with the purpose that SAV could set up a common ground for its audits of bad debts and cross ownership in commerical banks in Vietnam.

At the seminar, various topics were brought out for discussions. They were among others SAV’s role in examining financial activities and assessing bad debts and cross-ownership in commercial banks, solutions to bad debts in Vietcombank, bad debts and cross ownership in Vietinbank and recommendations from audit results in 2017, role of the State Bank of Vietnam in managing bad debts and cross ownership in financial institutions.

One of the focuses of SAV in recent years is auditing financial activities, assessing bad debts and cross ownership issue in commercial banks. These issues are common in targeted banks and commercial banks in Vietnam. Findings in recent audit reports show that the proportion of bad debts in financial institutions is still high and there are many probles in management of bad debts and cross ownership in banking sector.

According to report from SAD VII at the seminar, during 2011-2015 SAV had made lots of recommendations for adjustments to financial reports of various commercial banks subject to its audits. In more details, it had requested for increases in provisions for bad debts, decreases of projected incomes and profits, compliance with laws, credit regulations and safety regulations by commerical banks, and identified distint responsibilities to relevant wrong doers. It also put forward many recommendations to the State management agencies and commercial banks in monitoring bad debts and cross ownership in financial institutions. These included a decrease of ownership by commercial banks in financial institutions, a reduction of investments into other sectors as prescribed in Circular No.36/NHNN, and an increase in capital adequacy and liquidity in line with Basell II criteria.

As the event concluded, organisers summed up opinions and feedbacks from the participants and informed that they would do more studies on these topics and related issues so as to promote the quality of its audits of bad debt and cross ownership in financial institutions in Vietnam in the future.

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