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Banks threaten to sue Vietnam Credit, VN Credit threatens to sue banks   2009-12-17 - VietNamNet/DV

Though credit rating agencies that give grades to banks, stock offerings, bonds and so on are a fixture in the most developed countries, they’re a novel idea in Vietnam.  A private company, ‘Vietnam Credit,’ has burst upon the scene, presuming to rate the nation’s banks. 

 

Vietnam Credit first gives bank ratings

VNBA rejects Vietnam Credit’s bank ratings

 

Ta Ngoc Huu, Public Relations Manager of Vietnam Credit

The ratings recently released by Vietnam Credit have been vehemently criticized by commercial banks, including the ones given relatively high grades.  Some are threatening lawsuits.

 

Ta Ngoc Huu, Public Relations Manager of Vietnam Credit, says the firm’s rankings are well-grounded.  Talking with Dat Viet newspaper, Huu emphasized that Vietnam Credit will fight fire with fire, suing “those, who, acting on behalf of some group of interests, make biased statements.”

 

Dat Viet: Commercial banks say that though this is the “2009 rating report,” it is been based on data from 2008 and previous years, and so has misled the public. What would you say about that?

 

Ta Ngoc Huu: Vietnam Credit’s 2009 Vietnam Bank Rating Report is a report released in 2009. However, the information and materials for reference is the ones which happened in 2008 and previous years. We plan to release the report annually.  For example, next year we will have “The 2010 Vietnam Bank Rating Report,” which will be based on the data up to 2009.   That conformes to international practice in doing statistics.

 

DV: What standards did Vietnam Credit use rate banks?

 

Huu: We have experienced technical staff who build up criteria with reference to the international standards. The Vietnam Credit Index is developed from criteria such as each bank’s capital adequacy ratio, liquidity, business efficiency, managerial ability and experience, brand, quality, service and asset expansion – eighteen criteria in all.  Our software, CRIS (the Credit Rating Information System), then provides us with the scores of every bank, ranging from 100 to 1000, which correlate with ratings from D to AAA.

 

We can ensure that we are not biased toward any bank when building the criteria.  Nor did we contact any banks while implementing the rating project.  We’ve consulted experts to make sure that our scores are consistent with international standards.  In particular, we’ve paid attention to the stability and vitality of the Vietnamese banks so the scores we gave aren’t quite as strict as an international rating agency might assign.

 

We noted in the report that we base our ratings only on information that has been made public in accordance with the law.  We also stressed that the report just reflects our own opinion and that it is just for reference.

 

DV: Banks believe that bank ratings should be done by State Bank of Vietnam’s inspection agency, not by a private firm like Vietnam Credit?

 

Huu: We do not agree with the Vietnam Banking Association’s viewpoint.  I don’t think there’s any document which prohibits private firms from expressing their own opinions about businesses.  I’m wondering why VNBA didn’t voice its protest before, when we said we would release the bank rating report?  Why did it only express opposition after the report was released?

 

In countries with developed market economies, credit ratings are encouraged, because the rating information is really useful as reference materials and allow banks to consider to avoid crises.

 

After eight years of experience working with international organizations, we believe we know our job.  I should point out that currently, some Vietnamese commercial banks have hired international credit rating firms such as Moody's and S&P to give credit ratings to them.

 

Vietnamese securities companies, which are also private firms, also release reports which assess the ‘health’ of banks and analyze credit risks. Why don’t banks protest their analysis?

 

DV: Are you worried by the threat of VNBA and many individual banks to lodge a lawsuit with the State Bank of Vietnam against Vietnam Credit making such ratings and releasing them to the public?

 

Huu: If we violate the laws, we will have to face the court.  However, if anyone, acting on behalf of some group, makes biased statements, he will be sued by Vietnam Credit.

 



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