The State Bank of Vietnam (SBV) is planning to inspect share transfers between banks this year to prevent cross-ownership in the banking system.
In a new report to the National Assembly, the SBV said cross-ownership and direct mutual ownership of shares between banks and businesses in Vietnam has decreased, while manipulation and control of banks by large shareholders have been limited.
However, share ownership beyond the prescribed limit and cross-ownership are still difficult to prevent as major shareholders and groups of shareholders deliberately conceal their holdings by placing them in the name of another person or organization to circumvent regulations, according to the central bank.
The SBV said it will inspect the transfer of shares among credit institutions that may lead to illegal control and providing too much credit to the real estate sector or major shareholders and related persons.
By monitoring capital, share ownership, lending, investment, and capital contributions, authorities will assess the safety of banking operations and consider passing on suspected violations to investigative agencies.
The central bank also mentioned difficulties in preventing cross-ownership involving enterprises under the management of ministries and branches.
The SBV said it is difficult to detect relationships between enterprises because of the limited information available, especially among non-public companies.
"Ministries and branches need to supervise investment, capital contributions, and share purchases of affiliated enterprises at credit institutions to ensure safety and timely repayment of debts."
In 2022, the central bank's inspectors carried out 1,420 reviews, of which 27% were on-the-spot. In the first three months of this year, it conducted 371 inspections, of which 13% were not pre-warned.