Vietnamese banks would expectedly face up tougher competition with an influx of foreign banks after the country officially joins into the World Trade Organization (WTO).
Like Vietnamese legal entities, branches and representative offices of foreign banks in Vietnam will be entitled to discriminatory treatment right after the country enters the WTO.
According to a detailed report of the US Trade Representative Office (USTR), Vietnam committed to allow foreign banks to hold the maximum 49 per cent stake in Vietnamese banks instead of the current 30 per cent.
“Foreign banks will be allowed to open branches in Vietnam but foreign securities trading companies will be permitted to establish representative offices here,” the report said.
From April 1, 2007 foreign banks will be allowed to set up 100 per cent-foreign invested branches in Vietnam, the USTR reported.
Right after Vietnam joins the WTO, foreign securities trading companies can set up joint ventures with the maximum stake of 49 per cent. Five years later, the foreign side can hold 100 per cent stake in these joint ventures.
In fact, over the past years branches and joint ventures here have endeavored to put their firm footholds in Vietnam.
They have made great efforts to expand operation networks in Vietnam. Some branches of foreign banks have expanded securities activities such as securities custody, corporate bond underwriting and introduced modern banking services and utilities of international payment, forex trading, consumer lending, money transfer and others.
In addition, foreign banks are prevailingly injecting capital into commercial joint stock banks. The Australia-New Zealand Banking Corporation (ANZ), the World Bank’s International Financial Corporation (IFC) and the British Dragon Financial Holdings acquired nearly 27 per cent stake in the Saigon Thuong Tin Commercial Bank (Sacombank); Standard Chartered Bank bought 8.56 per cent stake from the Asian Commercial Bank (ACB); HSBC holds 10 per cent stake in the Vietnam Technological and Commercial Bank (Techombank); the Singaporean-based Oversea-Chinese Banking Corporation (OCBC) is completing procedures to buy 10 per cent stake from the Vietnam Bank for Private Enterprises (VPBank) and eyeing to acquire another 10 per cent. Other foreign banking corporations are also negotiating to purchase stake of local joint stock banks.
To date, the country homes four joint-venture banks, nearly 30 branches and 49 representative offices of foreign banks which are running next to 39 domestic banks.
It is forecast that the country would witness a bigger flock of foreign banks in the near future whereby domestic banks would unavoidably face up harder competition.
However, such a massive entry will expectedly promote trade, tourism, service, money transfer, international payment activities and promote reforms of domestic banks and joint ventures.
Vietnam Economic Times
Vietnamese
