Why are weak banks allowed to live? Even though It is difficult to find investors who want to take over banks on the verge of ruin, very few banks are going bankrupt.   The State Bank of Vietnam (SBV), at a meeting with the local press earlier this year, once again stated that it would enhance the restructuring of weak banks to make the banking system healthier. The central bank’s representative at the meeting revealed that the Singaporean OCBC Group was conducting due diligence to buy GP Bank. People then believed that the takeover deal would be completed soon, because in general, the central bank only releases information to the public once it is sure the events will happen. However, there has been no further information since then about the stake transfer deal since then. As such, Vietnam’s plan to sell weak banks to foreign investors still cannot be implemented. Analysts commented that encouraging weak banks to merge into big and powerful banks shows that this is the solution favored by the State Bank, because the merger would not cause break-ups, and therefore, was believed to be the safest solution. However, many economists have recently recommended that the State Bank break banks that cannot recover, saying that though this is not the optimal solution, it would still be better than letting the weak banks drag on under poor conditions. The government has also repeatedly urged the State Bank to dissolve banks that cannot be revived. In the past, some of these banks were eliminated, namely Me Kong, Asia Pacific, Nam Do and Viet Hoa. However, a banking expert, who asked to be anonymous, said that bringing a bank to bankruptcy is an “impossible mission” now, even though bankruptcy is a business right protected by law. The expert said legal loopholes are the problem. Under current laws, banks are allowed to mobilize capital of up to 20 times of the banks’ chartered capital. Meanwhile, mobilized capital, in many cases, has been provided to companies owned by the bank owners. “If banks are dissolved, it is not the banks’ owners, but depositors, who will lose money,” he explained, adding that once depositors rush to withdraw deposits from banks, this will shake the entire monetary market. “Therefore, the State Bank was urged again and again to reconsider the ratio of mobilized capital to banks’ chartered capital. But the State Bank remains silent,” he noted. The expert noted that the central bank had been trying to use the “Vietnamese method” to rescue weak banks. In some cases, it put the weak banks under special control of State Bank inspectors. The State Bank considered providing capital to banks so that the banks could pay depositors. In other cases, the State Bank asked state-owned commercial banks to help the weak banks recover. The Bank for Investment and Development of Vietnam (BIDV), for example, was asked to “take care” of Nam Do Bank, while VIetcombank was asked to rescue BuildBank through a cooperation agreement. TBKTSG