Vietnam to have new banks by year end

It is expected that operation licenses will be given to one or two banks by the end of the year, which will be established in accordance with the new laws.

From July 20, 2007, the institutions and individuals that can meet the requirements of financial situation and corporate governance will be able to apply to the State Bank of Vietnam for setting up new banks.

The regulation on licensing banks and stipulating the operation of joint stock banks was published on the official gazette on July 5, thus making the regulation effective as of July 20, 2007, or 15 days after it was available on the official gazette. The regulation sets new strict requirements on financial capability, sources of capital contribution, governance and management skills.

In order to be licensed right in 2007, investors must have at least VND1tril ($62.5mil), which must be sourced from shareholders’ contributions, not from loans.

According to Kieu Huu Dung, Director of the Department for Banks and Non-bank Credit Institutions under the State Bank of Vietnam, nearly 30 applications have been made to the central banks prior to the date the new regulation came into effect, and 20 of them have applied again after the new regulation became valid and the central banks announced that they were receiving new applications.

“Our preliminary consideration shows that several investors can meet the new requirements, and it is expected that one or two banks will get the license by year’s end,” said Mr Dung.

Besides the applications for setting up new joint stock banks, the central bank is now also considering the shifting of the Postal Savings Service Company into a bank. It remains unclear whether the company will shift to operate as joint stock bank or under the mode of a state owned bank.

Mr Dung said that the central bank has received the applications for setting up three 100% foreign owned banks from the Hong Kong Shanghai and Banking Corporation HSBC, ANZ and Standard Chartered Bank. Four other banks in Asia have made the same request, but they have not fulfilled the necessary documents for submission. If meeting the set requirements, 100% foreign owned banks will be licensed five or six months after the day of document submission.

Source: VNE