Bank bankruptcy defined in law

HA NOI — Government Decree No 05, issued on Monday, subjects credit institutions to the provisions of the Law on Bankruptcy, defining a bank as bankrupt when it is not able to pay debts that have come due even after the central bank has provided liquidity support and applied other measures aimed at keeping the bank solvent.

"Declaring a bank bankrupt has a very strong impact on depositors, especially individuals, as well as the overall economic situation of a country," commented former State Bank of Viet Nam Governor Cao Sy Kiem. "Therefore, bankruptcy procedures must be entered into carefully and strictly to ensure the interests of depositors and social stability."

Eligible to send initiate bankruptcy proceedings are creditors, employees of the bank, and stakeholders or stockholders in the bank. Legal representatives of the bank are obligated to initiate proceedings if the institution is bankrupt.

"The public should know that when a bank enters bankruptcy procedures, interest parties will be protected and there will be no negative effects on society," Kiem said. "In other words, if the bank is left to collapse, the impact would be even worse," he added.

"Handling bankruptcy requires a very close co-operation among relevant offices and people," said an economist who asked to stay unnamed. "Public psychology is highly critical. If the bankruptcy is found in an early stage, impact on society will be minimised. Otherwise, there could be a domino effect, with unpredictable results," he told Viet Nam News. — VNS