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Vietnam plans banks among Asia’s top 100

By Anh Minh   August 11, 2018 | 11:24 pm PT
Vietnam plans banks among Asia’s top 100
A man walks past the State Bank of Vietnam in Hanoi. Photo by Reuters
A Vietnamese government masterplan envisages at least 2-3 banks in Asia’s top 100 in terms of total assets by 2025.

The masterplan, approved by the Prime Minister, covers the banking sector's development until 2025 with a vision to 2030. It also targets to have 3-5 banks listed on foreign stock exchanges.

The plan aims at gradually increasing the independence, initiative and accountability of the State Bank of Vietnam in managing monetary policies and controlling inflation.

It seeks to improve local banks’ competitiveness, enhance transparency in the banking sector and make the sector operate in accordance with international standards.

This means finalizing the monetary and banking regulatory framework in line with market principles, international practice and international integration requirements.

Under the plan, in the next two years, local banks will have continue the restructuring process, dealing with bad debts and weak banks to make sure that the bad debt ratio stays under 3 percent.

Deputy PM Vuong Dinh Hue told a forum on mergers and acquisitions held in HCMC on August 8 that the government will would sell banks it has acquired to foreign investors, based on the Law on Credit Institutions.

Vietnam will also limit or stop issuing new licenses for the establishment of 100-percent foreign owned banks in the country, he said.

The restructuring of the financial-banking industry has helped reduce its bad debts from 10.08 percent (of total credit) in early 2016 to 6.9 percent last June. By the end of May this year, the ratio was just 2.18 percent.

The master plan allows inspectors to expand their operations, and financial corporations operating as parents-subsidiaries will be inspected by the central bank.

The plan also set targets to reduce the state capital ownership in three major banks: Vietcombank, BIDV and Vietinbank.

In 2018-2020, the state will reduce its shares in those banks to at least 65 percent and in 2021-2025, the figure will be lowered to 51 percent.

The three banks will select prestigious and strategic shareholders that have financial capacity and management experience, and then prepare themselves for proceeding towards listing shares on foreign stock exchanges.

Vietnam has nine wholly-owned foreign banks, four state-owned banks and 31 joint-stock banks.

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