Last year, PBB had reached an agreement to buy shares of BIDV and established the VID Public Bank (VPB). — Photo tinnhanhchungkhoan

HA NOI  (Biz Hub) — The State Bank of Viet Nam approved in principle this week the establishment of Malaysia's Public Bank Berhad (PBB) in Viet Nam.

Following the approval, PBB will become the sixth wholly foreign-owned bank in Viet Nam after HSBC, Standard Chartered, ANZ, South Korea's Shinhan Bank and Malaysia's Hong Leong Bank Berhad.

As per an official order issued by SBV Governor Nguyen Van Binh, PBB would receive all the capital contributed by the Bank for Development and Investment of Viet Nam (BIDV) at the VID Public Bank–a joint venture of PBB and BIDV–before transferring the VID Public Bank's capital to PBB's wholly foreign invested bank in Viet Nam.

Last year, PBB had reached an agreement to buy shares of BIDV and established the VID Public Bank (VPB).

According to the document, VPB and PBB are required to meet all regulated conditions to be qualified for the transfer.

In case PBB failed to follow these regulations, the central bank would withdraw the licence given to VPB under the current legal regulations.

Joint venture VPB was set up in 1992, with a 50/50 capital ratio contributed by BIDV and PBB. After its capital was boosted thrice, VPB's charter capital is currently pegged at US$62.5 million.

VPB was among first two joint venture banks licensed in Viet Nam during the country's first years of economic integration during the 1990s.

Some representatives from Malaysian banks are also doing business in Viet Nam, such as Maybank and Hong Leong, of which Hong Leong became the first foreign bank in Southeast Asia to receive an investment license to run as a wholly foreign-owned bank in Viet Nam in 2009.

CIMB Group Holdings Bhd, Malaysia's second-largest lender, also plans to seek a licence for operating in Viet Nam as part of its drive to expand operations in the fast-growing Southeast Asian market, Reuters reported, adding that the fifth largest bank in Southeast Asia considered Viet Nam as one of its top priorities in its expansion strategy, with a view to taking full control of local lenders. — VNS