Vietnam to Sell All State-owned Commercial Banks by 2010

The Vietnam Government has approved the banking reform roadmap to complete the privatization of all State-owned commercial banks (SOCBs), except for the Bank for Agriculture and Rural Development (Agribank), by 2010.

 

Under the roadmap, the State will retain a controlling stake in the banks but its holdings will be gradually reduced to 51 per cent. Foreign ownership will account for a maximum of 30 per cent of total shares, while each foreign investor is allowed to hold 10 per cent at most.

 

So far, the Government has given licenses to allow the Bank for Foreign Trade of Vietnam (Vietcombank) and Mekong Housing Bank (MHB) to go public.

 

According to a report on economic development and reform announced by the World Bank, the bank has recently expressed its concern over the operational quality of Vietnamese banks amidst expanding financial operations.

 

WB warned that the local banks have been spending huge foreign currency loans to real estate developers as well as racing to raise interest rates to attract deposits.

 

Five state-owned banks in Vietnam include Agribank, Vietcombank, MHB, the Industrial and Commercial Bank (Incombank) and the Bank for Investment and Development of Vietnam (BIDV). As of July, these banks have a combined registered capital of VND18.47 trillion (US$1.2 billion) and average capital adequacy ratio of only 4.4 per cent.