HANOI (Reuters) - In a country where factions, loyalties and connections can determine plum political posts, few among Vietnam’s banking community would argue Nguyen Van Binh’s rise to the Communist Party’s politburo is without merit.
Binh joins the party elite from a central bank credited with averting a banking sector collapse after $20 billion of non-performing loans (NPLs) started a contagion that shook the property market and wiped out tens of thousands of businesses.
He is considered a safe pair of hands for a leadership that needs top technocrats at a crucial time of reform to an economy that remains fragile, despite GDP growth of 6.7 percent and credit growth of 18 percent last year, both five-year highs.
The State Bank of Vietnam (SBV) has trimmed once spiraling average inflation to its lowest on record in 2015 and its currency interventions have helped insulate the exports-led economy from external shocks. The dong is currently one of Southeast Asia’s most stable currencies, losing 4.9 percent in 2015 compared to double digits elsewhere.
“Binh is comprehensively trained and quickly grasped the principles of a market economy,” said former SBV governor Cao Si Kiem.
“There’s a bit of difficulty and stumbling at first when management wasn’t smooth, but later on his expertise became increasingly exhibited.”
A new cabinet will be agreed later this year and Soviet-educated Binh is speculated to become deputy premier. He has not commented on Thursday’s politburo appointment.
Binh, 54, became SBV governor in 2011, tasked with taming an overheating economy with inflation at 18.6 percent and fixing a crowded banking sector plagued by lax oversight, embezzlement and loose lending.
The SBV has forced sector-wide restructuring and buy-outs, shrinking 15 banks into seven and setting up an asset management firm on a meagre budget that helped trim bad debt from 17.2 percent of credit in September 2012 to 2.7 percent last month, although many NPLs have yet to be fully settled.
Economist and banker Nguyen Tri Hieu said weaknesses remained and a lot of work was still needed, but Binh was a positive inclusion.
“The banking industry has had major improvements... If he becomes a leader, like a deputy prime minister taking care of finance, it’s perhaps a good thing.”
Reporting by Mai Nguyen; Writing by Martin Petty; Editing by Nick Macfie