State Bank of Vietnam, the central bank is now tightening the control over commercial banking establishment by forming an appraisal council to effectively enact its newly-issued regulations, Vietnam News Agency reported.
SBV’s move is aimed to build a healthy banking system as recently a wave of groups who have been racing to form their banks in Vietnam, it noted.
“That companies and groups are racing to form their banks proves that the banking sector is so attractive and profit-making, however, banking establishment-a great problem relating to the country’s stable macroeconomy-should be double-considered, ex-governor Le Duc Thuy was cited as saying.
Under the newly-issued regulation, new local commercial banks must have a registered capital of at least VND1 trillion from now till 2008 and to be raised to VND3 trillion or more after December 31, 2008
Regarding establishment of 100 per cent-foreign-invested banks or branches in Vietnam, the central bank officially issued a circular, requiring for their total assets of at least of US$10 billion before the fiscal year and the bad debts of 3 per cent of total assets and profitability in three consecutive years.
Kieu Huu Dung,Head of SBV’s Banking and Credit Department said foreign investors are now allowed to buy maximal 30 per cent stakes in Vietnam’s commercial joint stock banks. They now have another choice after the government of Vietnam has recently allowed wholly-foreign invested branches in Vietnam in compliance with WTO commitments from April 1 of 2007.
“By allowing formation of new banks, Vietnam’s banking market with 70 per cent state holdings will be split into small pieces, Dung noted, admitting that this is an inevitable trend.
So far this year, SBV has received 13 proposals to form banks including Bao Viet Insurer, FPT and VNPT. If they satisfy all the requirements, SBV will possibly issue licenses for one or two banks, Dung noted.
HSBC, ANZ and Standard Chartered Bank have submitted their proposals to set up their 100 per cent-foreign-invested branches in Vietnam.
Currently, five state-owned banks, 35 joint stock banks and six joint venture banks are operating in Vietnam. (VNA, Vietnam Panorama)
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