The State Bank of Vietnam is preparing for a statute on banking administration whereby the central bank will consolidate and improve the quality of existing banks instead of establishing new banks, according to a reliable news source.
Some experts said that big domestic corporations all want to set up their own banks whereby repurchasing operating banks, especially small rural joint stock banks, is considered the most efficient way.
Ironically, the number of banks that are possibly for repurchasing is modest.
The Electricity of Vietnam (EVN) was apparently the quickest to boost its equity in the An Binh Bank (Anbinh Bank) to 40 per cent at a reasonable price, partially upgrading this bank from a rural joint stock bank into an urban bank with a far broader scope of operations.
Currently, in addition to four state owned banks holding the major market share, the remainder are more than 30 joint stock banks, both rural and urban, four joint venture banks and nearly 30 branches of foreign banks.
According to an official of the SBV, reforming commercial banks is under way. A series of international standards have been introduced in banks amidst increasingly global integration.
“When streamlining the banking system is seemingly half-done, the establishment of new banks has naturally not yet been considered,” said the official.
This official added that “no one frankly say that setting up new banks will be banned. However new requirements which would expectedly be very tough will be issued, aiming that if new banks are established, they will be required to run well right from the start and such a requirement is difficult.”
First of all, one of the most important requirements is that a new bank must have chartered capital of at least VND1 trillion, equal to a big commercial joint stock bank like the Saigon Thuong Tin Commercial Bank (Sacombank) or the Asia Commercial Bank (ACB). It does not mention some other technical standards on management quality, banking technologies and so on.
The aforementioned views are under review however it can be seen that restricting the establishment of new banks will be considered.
Several years ago, a project on setting up a bank specializing in serving aquaculture sector was turned down.
Currently, a series of corporations such as the Vietnam Insurance Corporation, Vietnam Post and Telecommunication Corporation and others are all scheduled to found their own banks under their groups however it is likely that the projects will not be easily approved.
Following EVN’s suit, some other corporations intend to repurchase stakes of rural or urban joint stock banks.
However, these corporations will find it quite hard to enter urban banks because their share prices are very high and existing shareholders have long been in place. Thus, these investors turn to eye up rural joint stock banks. Nevertheless, the number of such banks is small.
Moreover, it is difficult to negotiate with these banks because they are well aware of how important their licenses are.
Naturally, rural joint stock banks have become unexpectedly expensive.
Investment, Vietnam Panorama
Vietnamese
