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Vietnam's central bank to restructure 4 commercial banks

HANOI, May 8 (Xinhua) -- Vietnam's central bank has planned to restructure four weak commercial banks in a move to strengthen the country's banking system, the Vietnam News reported on Monday.

The four poorly-performing banks are DongA Bank, Vietnam Construction Bank, Ocean Bank and Global Petro Bank, the central bank said in a report submitted to the National Assembly's Economic Committee last month.

Among the troubled banks, Vietnam Construction Bank, Ocean Bank and Global Petro Bank would be forced into takeover deals with stronger commercial banks, including Vietnam's largest lender Vietcombank, the report said.

The move was part of the central bank's efforts to consolidate the local banking system and tackle non-performing loans, according to the report.

Bad debts of the local system of credit institutions accounted for 2.91 percent of their outstanding loans by the end of February, up from 2 percent at the end of 2022 and 1.49 percent at the end of 2021, said the central bank, which set the target of keeping the bad debt ratio under 3 percent.

Meanwhile, the potential bad debts could mount up to around 5 percent of total outstanding loans due to a real estate slump, said the central bank.

The real estate market has contracted since 2022, leading to dwindling investments from developers and home buyers.

Given difficult market conditions, property developers have struggled to ease their stifling funding squeeze, weighing on their ability to meet debt obligations.

The central bank is also restructuring Saigon Joint Stock Commercial Bank (SCB), which has been under "special control" since last October after a bank run depleted its deposits.