13 joint stock banks waiting to be set up

By the end of August 2007, 13 applications to establish new joint stock banks had been put on the table of the State Bank Governor.

Following the wave of setting up securities companies, the wave of establishing new banks has been kicked off, experts say.

In fact, the race to establish banks started at the same time as the race to establish securities companies, in early 2006. However, in the past year, several tens of new securities companies have been established while no joint bank has been allowed to be established yet.

At the beginning of 2007, the State Bank of Vietnam reportedly received 25 applications to establish new joint stock banks, nearly equal to the number of urban joint stock banks now operational in Vietnam.

However, as the central bank decided to set higher requirements on new banks (the required chartered capital for an urban bank has been raised from VND70bil to VND1tril [$62.5mil]), several banks pulled out, and by the end of August 2007 the number of applications was 13.

The submitted projects all have expected chartered capital higher than the required level: FPT Bank VND1tril ($62.5mil), Lien Viet VND3,300bil ($206.25mil), Viet Tin VND1,680bil ($105mil), Kinh Bac VND1,500bil ($93.75mil). However, experts have pointed out that though having big chartered capital, new banks will still face a lot of challenges.

One of the biggest challenges is the personnel crisis. Though thousands of university students graduate each year, the increasing demand for employees remains unmet, especially demand for high-level, qualified staff.

In addition, banks will face risks in developing networks. As they will focus on retail services, network development is the most important task. Meanwhile, it is very difficult to find locations for setting up transaction offices nowadays. The new stretch of road from Kim Lien to O Cho Dua in Hanoi, which is 900 m long only, has welcomed 8 branches and transaction offices of different banks. There are four bank offices on the first floors of the two adjacent buildings in Trung Hoa-Nhan Chinh new urban area.

Moreover, banks will face a lot of other difficulties in technology, training, corporate governance and advertisement.

Source: VNE