Banks are prohibited from increasing salaries and bonuses if they have not made provisions to handle bad debts.

If banks have not restructured their debt and set aside enough provisions to handle bad debt, they will not be able to increase salaries or bonuses for their staff, managers, and executives. In addition, shareholders may not be able to receive dividends if they violate regulations.

If banks do not complete risk provisioning in accordance with regulations, they will not be able to increase salaries or pay dividends. Photo: Anh Quan.

On November 29, State Bank Governor Nguyen Van Binh issued instructions on debt classification, risk provisioning and use. Accordingly, banks must reduce operating costs by all means. In addition, banks will not be allowed to increase salaries or bonuses for staff, especially those at the executive management level, nor will they be allowed to advance dividends for the 2013 fiscal year if they have not fully set aside risk provisions. Not only that, units will have to classify debt and restructure debt according to regulations.

Except for state-owned commercial banks and joint-stock banks with state-controlled capital, credit institutions must seek the opinion of the State Bank's provincial and municipal branches on advances, dividend distribution, and profits for 2013 before implementation.

This is not the first time the Governor has made this statement."steel" rulesin dividend distribution, salary payment, and bonus payment for the entire system. Last year, to tighten discipline as well as create a source to handle bad debts, he also banned banks from increasing salaries and bonuses without setting aside risk reserves according to regulations. In fiscal year 2012, a series of banks announced dividend payment plans quite late, partly because they had to seek the opinion of the State Bank before implementing.

In 2012,profitAs well as salaries and bonuses of many units have decreased sharply because banks have to make more adequate provisions according to regulations.

According to Express