Banks urged to promote corporate governance

Corporate governance and management in commercial banks are two core factors that can determine their success or failure.

Corporate governance and management in commercial banks are two core factors that can determine their success or failure.

Vietnamese commercial banks still have a lot of work ahead to catch up with international norms of corporate governance despite their progress in recent years.

At a conference on corporate governance in bank restructuring at Hanoi on May 26, Can Van Luc, General Director of the Bank for Development and Investment of Vietnam (BIDV), said corporate governance would help improve business activities, as it would offer easy access to long-term capital as well as increasing business opportunities.

Luc added that it would also ensure benefits and fair practices among shareholders while enhancing competitiveness and integration.

Corporate governance should manage relationship with shareholders, auditors, follow management boards' structure and operation, monitor the role of supervising board and independent members, appointments and incentives, risk management and internal supervision, as well as ensure information quality and transparency, and establish policies and accounting system.

"A survey of 35 commercial banks showed that governance in Vietnam is more organised, as 34 out of 35 banks have one member of management board cum head of supervising board," he said.

In addition, information dissemination has become more transparent as all of the surveyed banks have websites; 27 of the banks had independent audit reports on their income and finances in 2013 and 2014.

However, corporate governance at Vietnamese banks still lacks a legal framework, while the role of management board members is not clear.

He proposed that the country should complete its legal framework of governance and strengthen the role and effectiveness of supervising boards, internal audits, as well as good risk management strategies.

He also asked commercial banks to increase transparency in information distribution by finishing financial reports on time and regularly updating information on their websites.

Sharing the view, Pham Huyen Anh, Deputy Chief Inspector of the State Bank of Vietnam, said the central bank had developed a governance system to suit international norms and credit risk management at 10 pilot commercial banks.

He said the banking sector's key tasks were to improve governance capacity, including corporate governance and risk management up to 2020. In addition, the country would have one or two large banks at regional level.

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