Vietnam expects foreign investors to bolster their engagement with the banking reform as the government seeks to speed up the local economy, said the chief of the Vietnamese central bank.
Addressing the 33rd Asian Bankers Association (ABA) General Meeting and Conference on November 11, Governor of the State Bank of Vietnam Le Minh Hung said the Vietnamese government will refine the legal framework and improve the business environment to hearten overseas investors.
During the first phase of the banking restructuring over the past five years, the local banking system has seen considerable improvements regarding the bad debt handling, the supervisory system and the application of international norms.
More opportunities are waiting for foreign players in the upcoming years as the SBV
steps up the banking restructuring, Hung said.
Daniel Wu, chairman of the ABA and president of Financial Holding Co., said a large number of bankers have shown interest and hope to join Vietnam’s banking reform.
Undercapitalized Vietnamese banks are in dire need for foreign capital to ensure their operations and scale up lending, especially when they implement Basel II standards, said Nghiem Xuan Thanh, chairman of state-owned Vietcombank
A number of foreign banks are holding majority stakes in Vietnamese lenders. Among them, Mizuho now holds a 15% stake in Vietcombank, Sumitomo Mitsui Banking Corp owns 15% in Eximbank, Bank of Tokyo-Mitsubishi UFJ takes a 19.73% in VietinBank
, and Standard Chartered holds 15.69% in ACB.
Vietnam caps foreign ownership in a domestic bank at 30%, with a 15% limit for a non-strategic investor. A foreign strategic investor can own up to 20% in a Vietnamese bank.
The government has several times signaled that it would soon lift the ownership ceiling for foreign investors, but no concrete steps have been made.