Precise Financial Information - Most Important Factor for Capital Market

VIB Forum interviewed Jean Louis Boyer, general director of the Natexis Banques Populaires Bank in Ho Chi Minh City.

Natexis Banques Populaires was the first foreign bank operating in Ho Chi Minh City after 1975. We started to operate officially in Vietnam in 1988 as the French Foreign Trade Bank with an aim of settling multinational debts. The French Foreign Trade Bank was then transferred to the Banque Populaire Group as the Natexis Banques Populaires. In December 1991, we opened our representative office in Hanoi, which was upgraded into a branch in 1992.

Banque Populaire Group is the fourth largest financial group in France, consisting of 21 Banque Populaire banks and 94 financial companies, which have 6.6 million clients, 2,696 offices in France, 116 branches in foreign countries with a total current assets of EUR 17.2 billion and revenues of EUR 7.64 billion and profits of EUR 1.171 billion in the 2004 financial year.

Natexis Banques Populaires is a bank under the Banque Populaire Group with 150 branches, including 116 branches in worldwide cities. Total revenues of the bank reached EUR 2.708 billion, accounting for 35 per cent of revenues of the Banque Populaire Group. Natexis Banques Populaires in foreign countries like in Vietnam, mainly help export enterprises. For enterprises operating in other fields, the bank invests in concrete projects with mainly short-term loans.

This can be settled via the stock market. To that end, Vietnam should have a tighter legal corridor and regulations on accounting and auditing. Open and transparent financial information will help local enterprises attract foreign investors. This is the most important factor to build and develop the Vietnamese stock market. Vietnam should lift a cap of ten per cent of shares of commercial joint stock banks and 30 per cent of shares of joint stock companies held by foreign investors to attract foreign investment capital and management technology. I suppose that the Vietnamese saving market to be of great potential but it still follows classical methods. Vietnam should more strongly develop its stock market and other investment forms to attract and effectively use this financial source. 

This financial service offers the highest profit and the lowest risk as capital is loaned to a large number of customers. It also stimulates the market’s demand, thus accelerating economic development. The most important condition for the formation and development of the market is precise and adequate financial information on clients. At present, Vietnam should settle three main issues for the development of this market in particular and the Vietnamese financial market as a whole. Firstly, salary does not reflect real incomes of individuals. As a result, the State cannot collect individual income tax in an equal manner. It may be difficult for consumers to get consumer credits. The authorised agencies should take measures to control individual financial information, encouraging people to declare and pay income tax adequately. Secondly, the overuse of cash has caused difficulties in gathering necessary information for providing loans and managing capital. When payments are made via banks, it will be easier for the State to collect tax and for banks to precisely calculate their clients’ financial information. Also, a large volume of cash will be used effectively on the financial market. Measures should be taken to encourage consumers to use credit cards and money transfer services while creating favourable conditions for banks to develop credit card and other relevant financial services. Thirdly, the State should have policies and a legal corridor to protect the interest of consumers and banks in this field.

In this period, Vietnam will gain more benefits in terms of finance and technology when foreign investors buy shares of Vietnamese joint stock banks. However, local banks should maintain their control, holding 51 per cent of shares. The involvement of foreign managers will help banks have more capital and improve their management and business effectiveness and competitiveness.

However, there should be a concrete roadmap for allowing investors to buy shares, creating a better and more equal legal environment. To this end, the banking sector should remove the discrimination between State-owned banks, and joint stock and foreign-owned banks. At present, Vietnam is taking measures to settle the issue. The loosening of mechanisms on the operations of foreign banks, and regulations of a unique payment index for all banks will help Vietnamese banks to reach international standards in a healthier competitive environment.

We will closely follow the market. The Vietnamese market has great potential. We will make suitable changes in accordance with the market’s development. With our tradition, we will continue to develop our relationship with export enterprises. In the consumer credit market, we will concentrate on developing high-end consumer services.