Foreign investors being wooed to invest in Vietnam banks

Foreign investors being wooed to invest in Vietnam banks

Vietnam wants foreign investors to buy stakes in local financial institutions to support measures this year to restructure the local banking system, with mergers on the cards and more flexible ownership limits to encourage participation, a senior banking official said.

The deputy governor of the State Bank of Vietnam (SBV), Nguyen Phuoc Thanh, said the SBV has facilitated mergers between financial institution in line with the current regulations, a move expected to create a healthier money and banking market, and speed up restructuring.

SBV deputy governor Nguyen Phuoc Thanh

Thanh said the SBV will continue to deal with cross ownership to form larger and more competitive financial institutions, while not ruling out the forced merger of weak institutions.

“Due to the lack of funding, the government of Vietnam has issued policies to call on private contributions to the restructuring of the banking system,” Thanh said.

“Both domestic and foreign investors are encouraged to take part in the process,” he said.

The SBV wants foreign institutions to work with Vietnamese partners to overcome difficulties and challenges by taking direct stakes, and may widen ownership limits at weak commercial joint stock banks after restructuring.

The government’s prevailing Decree 1 allows foreign investors take up to 30 percent of registered capital in local financial institutions.

“The SBV is aware that foreign investment plays an important role in the restructuring of local banking system, especially weak financial institutions,” Thanh said.

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