The State Bank of Viet Nam (SBV)’s Governor Le Minh Hung on Wednesday gave approval in principle to the Singapore’s United Overseas Bank Limited (UOB) to open a 100-per cent foreign owned bank in Viet Nam.

The Governor also passed the UOB Vietnam’s personnel list comprising names of people to be appointed as members of the board of directors, supervisors and the general director.

The UOB will still need to continue completing some other procedures, according to the SBV's regulations and guidance in order to be considered and granted a business licence for establishment and operation in Viet Nam. 

The SBV has also permitted the UOB to set up an affiliate based on the takeover of the bank’s HCM City branch right after being granted business licence.

In mid-2015, the Ministry of Planning and Investment urged the Government to instruct the SBV to issue a licence for UOB to operate a wholly foreign-owned bank in the country. The ministry said that Singapore is a major business partner, but does not yet have a fully-owned bank in Viet Nam, while other countries, even with smaller investments, have already established such banks.

The UOB is one of Asia's leading financial institutions with a network of 500 offices in 18 countries and territories. It already operates a branch in HCM City.

So far, ANZ, Hong Leong, HSBC, ShinHan, Standard Chartered, CIMB, Public Bank Berhad and Woori Bank have opened wholly foreign-owned banks in Viet Nam.

According to experts, more foreign banks are expected to enter Viet Nam’s market which has major potential with a population of roughly 93 million.

They recommended that Vietnamese banks must operate on a larger scale, with huge investments in technology and products through consolidations and mergers to create better and stronger banks that can compete with foreign banks.

By 2020, in accordance with the commitment to the World Trade Organisation, Viet Nam will have to completely open the doors of its banking sector. — VNS