The outlook for Vietnam's Circular 36 bank initiaitve.
Vietnam's banking sector remains fragile after the recent global economic downturn and because of excessive leverage by state-owned enterprises (SOEs) looking to finance acquisition sprees using debt. However, 2015 will be a key year: the State Bank of Vietnam (SBV) enacted 'Circular 36' on February 1, to improve the governance structures and operating requirements of Vietnamese commercial banking.
- Banking sector improvements should help the expanding commercial business sector through more vigorous lending.
- If Hanoi sticks to its reform agenda, banking sector systemic risk will decrease, with further rating upgrades likely for Vietnam.
- A stronger banking sector should underpin Vietnamese socio-economic development.