Potential risks in operations; disbursement when records and documents are not guaranteed
The Government Inspectorate has just issued Notice No. 84/TB-TTCP Announcing the Inspection Conclusion on the compliance with policies and laws in banking operations at Saigon - Hanoi Commercial Joint Stock Bank (SHB).
Notably, the Government Inspectorate pointed out that SHB's credit activities still have shortcomings, limitations, violations, and potential risks in operations.
Appraisal and approval of credit granting: Appraisal and approval of credit granting for a number of customers, there are still shortcomings, omissions, and violations in the collection, inspection of legal documents, assessment of customer financial capacity, loan plans, determination of loan value, approval of credit granting and control before, during and after borrowing, especially in the real estate sector, credit granting exceeding the total investment capital of the project, credit granting to groups of customers contributing capital, implementing common real estate projects (with indirect links) but not ensuring the rights of banks in inspecting, controlling, and comprehensively supervising the use of loan capital by the party directly using capital.
Regarding collateral: In the evaluation, receipt, monitoring, and management of collateral, there are still shortcomings, omissions, and violations such as: inappropriate valuation; incomplete and infrequent periodic inspection of assets to promptly take measures to handle, leading to risks in recovering loans for customers facing financial difficulties.
Disbursing funds to some customers who still have shortcomings, omissions, and violations in providing information according to regulations such as: disbursing funds when dossiers, documents, and documents proving that loans are used for the right purpose are not guaranteed.
The inspection and supervision of some customers are not in accordance with regulations on time and frequency according to SHB's regulations, and have not promptly reported and proposed handling plans to the credit approver on risks arising related to customer business activities in the process of using capital. Have not controlled the cash flow after disbursement by a third party to prove that the loan capital is used for the right purpose, especially in cases of lending capital to invest in real estate projects and providing credit when the 3-party purchase and sale has been completed.
Debt classification not in accordance with regulations of the State Bank
In addition, regarding the bad debt situation, the Government Inspectorate pointed out that at SHB bank, although bad debts are maintained stably below 3%, it is mainly concentrated in lending to buy houses for living and agriculture and rural areas. Implementing debt classification for some customers is not in accordance with the regulations of the State Bank, affecting the reflection of credit quality.
The rate of lending to priority sectors tends to decrease, SHB bank has not yet directed to strengthen strict credit control over potentially risky sectors (real estate, securities... ) throughout the system according to the direction of the Prime Minister and the State Bank.
In addition, the share ownership ratio of shareholders (T&T Group Joint Stock Company) and related persons is exceeding 5.086%, the maximum ratio according to the provisions of the 2024 Law on Credit Institutions, but there is no comprehensive solution to ensure the limit on the capital contribution ratio.
The provision of information by shareholders owning over 1% of charter capital to banks is still incomplete, posing risks in managing bank ownership. But currently, banking law does not have sanctions to handle the act of providing incomplete information by shareholders owning over 1% of charter capital.
The Inspectorate clearly pointed out that for the above-mentioned violations and shortcomings to occur, the responsibility lies with: the Board of Directors and assisting departments and divisions in organizing and directing the completion of procedures and regulations for credit granting activities; the Senior Credit Council, SHB leaders at all levels and SHB officials under their authority in credit granting activities.
