Singapore's UOB gets nod to open wholly owned bank in Vietnam

Vietnam's central bank has granted initial approval for Singapore’s United Overseas Bank Ltd (UOB) to open a wholly foreign-owned bank in Vietnam, Singaporean Prime Minister Lee Hsien Loong said on Thursday.

“This is a major step forward by the Vietnamese government in creating advantages for the Singaporean bank to approach Vietnam’s financial market and improve its financial services in the country,” Lee was quoted in a Vietnamese government statement as telling reporters after meeting with his Vietnamese counterpart Nguyen Xuan Phuc in Hanoi.

UOB would still need a license to formalize the process of opening a fully-fledged bank, which would join eight other 100-percent foreign-owned banks in Vietnam. Singapore is Vietnam's third largest investor.

In mid-2015, Vietnam’s Planning and Investment Ministry urged the government to instruct the State Bank of Vietnam, the country's central bank, to issue a license for UOB to operate a wholly foreign-owned bank in the country.

Singapore is a major business partner, but does not yet have a fully-owned bank in Vietnam, while other countries, even with smaller investments, have already established such banks, the ministry said in its proposal.

UOB is one of Asia's leading financial institutions with a network of 500 offices spanning 18 countries and territories. It already operates a branch in Ho Chi Minh City, the country's business hub.

So far ANZ, Hong Leong, HSBC, ShinHan, Standard Chartered, CIMB, Public Bank Berhad and Woori Bank have opened wholly foreign-owned banks in the Southeast Asian country.

In December last year, Moody’s gave Vietnam's banking system a stable outlook over the next 12-18 months.

Moody's said the country's macroeconomic stability and resilient economic growth will continue to support the banks' weak credit profiles.