Loosened foreign cap to benefit banking sector

Tuesday, Oct 01, 2013 16:39

The Government is set to let foreign companies own up to 49 per cent of local banks in the near future. — Photo ndh.vn

HA NOI (Biz Hub) ― The foreign ownership cap for Vietnamese banks, if lifted to 49 per cent, would significantly benefit the domestic banking industry, bank leaders have told the media.

Prime Minister Nguyen Tan Dung revealed in an interview in New York last week that the Government was set to let foreign companies own up to 49 per cent of local banks in the near future in favour of private sector development. The maximum quota is currently enforced at 30 per cent.

"We have already allowed wholly foreign-owned bank branches to be present in Viet Nam. Such an increase in the foreign equity limit at local banks is a good sign, and I suppose that we should expand on it soon," said Sacombank chairman Pham Huu Phu.

"With more foreign money inflows, the banking sector will be better than it is nowadays," he said, adding that some higher ratios than 49 per cent would meet strategic partners' need even more strongly. "This is a normal rule of a market economy."

He noted that development potential hadn't been fully promoted with the current quotas in place. This was shown in cases such as Sumitomo Mitsui Financial Group holding a 15 per cent stake in Eximbank, and Standard Chartered holding 20 per cent in Asia Commercial Bank.

ABBank chairman Vu Van Tien agreed that the change would create a more effective channel for mobilising foreign capital, which would help local banks expand operations and enhance management capacity. It would also help improve the financial situation of the whole banking system.

He said the bank has received important management assistance from its foreign investors, Maybank and International Finance Corporation. "In my experience, good strategic partners will facilitate sustainable development."

"It's clearly good news if room is increased for foreigners…this will open up big opportunities in terms of market and business," said Orient Commercial Bank chairman Trinh Van Tuan.

He added that any increase in foreign equity would depend on the needs of banks in different periods. ― VNS

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