At least one Vietnamese banking-finance group will be established in the next five years to operate both inside and outside the country, according to the forum entitled “Building a banking and finance group model in Vietnam” opened in Hanoi recently.
Addressing the forum, Le Xuan Nghia, director of the State Bank’s Banking Development Strategy Department, said that Vietnam’s credit institutions have seen positive organizational changes in recent years.
“Economic growth coupled with the development of the Vietnamese banking system and the country’s bid to join the global economy has revealed the need to establish a banking and finance group,” he said.
“The equitization of two state-owned commercial banks - the Bank for Foreign Trade of Vietnam (Vietcombank) and the Mekong Housing Development Bank - along with the establishment of the Bao Viet Financial Insurance Group, are initial steps in building up a new banking and finance group model in Vietnam.”
Pham Huy Hung, general director of the Industrial and Commercial Bank of Vietnam (Incombank), shared the view, saying that several state-owned commercial banks (SOCBs) were preparing to establish such groups. However, establishing a banking and finance group requires a lot of time and the right conditions.
“SOCBs have to privatize to operate as shareholding companies and become the centers of banking and finance groups. Their subsidiaries, including securities, leasing, and asset management companies operating as limited liability companies also have to be transformed into joint stock companies. Parent companies must have sufficient capital to create a financial foundation for finance and banking groups,” Hung said.
The deputy general of the Bank for Investment and Development of Vietnam (BIDV), Hoang Huy Ha, said the establishment of banking and finance groups should be based on spontaneous associations of capital and their members’ business activities in providing banking and finance products and services.
Nguyen Thi Mui, deputy director of the Institute of Finance, said parent companies in a group must control their subsidiaries based on the proportion of contributed capital, trademarks, technology and market assistance.
Other experts said that the central bank’s permission for commercial banks to open securities and insurance companies has created conditions for the establishment of banking and finance groups.
However, the process of establishing banking and finance groups is still “spikes and thorns” for local commercial banks because a lack of legal policies relating to organization, operation and other necessary conditions, Ha from BIDV said.
In addition, commercial banks and SOCBs are facing difficulties in personnel resource as most bank managers lack professional training, self-control and self-motivation.
Vietcombank and Incombank recently announced they would develop their operations under the banking and finance group model, but have yet to reveal details of how this would be accomplished or a time frame.
VNS
Vietnamese
