The Vietnamese banking sector, now undergoing drastic restructuring, will have more opportunities to improve its financial capacity when EVFTA takes effect. (Photo: VNA)Hanoi (VNA) – The Vietnamesebanking sector, now undergoing drastic restructuring, will have moreopportunities to improve its financial capacity as well as learn modernbusiness models and management from their European partners after theEU-Vietnam Free Trade Agreement (EVFTA) takes effect, according to insiders.
The sector will become more attractive to European investors than ever before asVietnam has pledged to allow them to hold up to 49 percent of charter capitalat two Vietnamese banks. The maximum rate of foreign ownership is now capped atonly 30 percent.
The offer will be applicable to only joint stock banks, excluding BIDV,Vietinbank, Vietcombank and Agribank, in five years.
European credit institutions must comply with Vietnam’s regulations onprocedures for mergers and acquisitions, as well as safe and competitiveconditions, comprising limits on shareholding rate for individual andinstitutional investors on the basis of national treatment.
Currently, the stake owned by an individual foreign investor in a Vietnamesebank is capped at 5 per cent and the maximum rate for a foreign institutionalinvestor, 15 per cent.
Experts said that more European investors will jump into the Vietnamese bankingsector in the time ahead, attracted by heightened foreign ownership rates atlocal banks.
According to a representative from the Vietnam Investment Securities Company,larger room for foreign investors will undoubtedly help Vietnamese joint stockbanks access to a large amount of capital while expanding their creditactivities, especially in the context that the loan-deposit rate at commercialbanks is limited at 85 percent.
In addition, the banks will be able to access effective management apparatus oftheir European partners who have considerable management experience and areapplying international regulatory accord of Basel III and moving towards BaselIV.
Experts believed European investors will eye those banks which have some goodcriteria, such as clearing bad debts, focusing on core credit activities andmeeting the State Bank of Vietnam’s standards.
To date, local banks allowed to expand roomfor foreign ownership remain unknown.
There are 16 Vietnamese banks completing adoption of Basel II standards, namelyVietcombank, MB, Techcombank, ACB, VIB, MSB, HDBank, OCB, TPBank, VPBank,VietBank, SeABank, Nam A Bank, LienvietpostBank, BIDV and Viet Capital Bank./.
VNA
