Commercial banks won't be able to save all of their struggling borrowers at any cost, the State Bank of Vietnam Governor Nguyen Van Binh said at a dialogue on July 20 among Hanoi's authorities and representatives of about 100 enterprises.
The statement followed recent media reports and complaints by enterprises that many commercial banks had failed to refinance their loans to interest rates of less than 15 percent, in accordance with a recent State Bank order.
Earlier this month, the State Bank had asked lenders to lower rates on outstanding loans in a bid to ease burdens on enterprises in difficulties due to the prolonged economic downturn.
At the dialogue Binh clarified that banks will assist firms which demonstrated the potential to overcome current difficulties and develop in the long term. There will be no point in helping companies destined for default in any case, he noted.
Nguyen Thi Mai Suong, director of the State Bank's Hanoi branch, said all 12 joint-stock commercial banks and eight finance companies based in the capital city had lowered their lending rates on existing loans to 15 percent per year. Vietcombank and BIDV had slashed rates for all existing contracts, while other lenders had cut rates for around one-third to half of their existing contracts, she said.
According to Suong, lending increased 4.38 percent during the first half of the year. "Never in the last 10 years has credit growth been as slow as it was in the first half of this year," she said. "Growth has only been in positive figures for the last three months."