Vietnamese banks could be taken over by regional big banks
VietNamNet Bridge - When the ASEAN Economic Community takes effect, Vietnam will have to allow up to 70 percent of foreign ownership ratio in Vietnamese banks.

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When the ASEAN Economic Community takes effect, Vietnam will have to allow up to 70 percent of foreign ownership ratio in Vietnamese banks.

This is the reason why experts have warned that Vietnamese banks may be taken over by regional big banks once the door to Vietnamese banks opens widely to them.

According to the State Bank of Vietnam (SBV), by the end of July 2015, Vietnam had five 100 percent foreign owned banks, four joint venture banks, 49 foreign bank branches and 51 representative offices.

The total assets of foreign and joint venture banks had reached VND715.250 trillion by that time, accounting for 11.01 percent of the total assets of the Vietnam banking system. The figure was very modest compared with total assets worth VND3,065,159 billion owned by state-owned banks and VND2,713,250 billion owned by joint stock banks.

However, the gap in chartered capital among the three groups of banks – foreign banks, state-owned banks and joint stock banks – is not big. The figures were 20.34 percent, 32.56 percent and 47.11 percent by July 2015.

If considering the ratio of chartered capital on total assets, foreign and joint venture banks have the highest ratio, 12.66 percent. Meanwhile, joint stock banks rank the second with 7.73 percent and state-owned banks 4.73 percent.

By the end of July 2015, Vietnam had five 100 percent foreign owned banks, four joint venture banks, 49 foreign bank branches and 51 representative offices.

Bearing limitations on capital mobilization and lending, the credit market share held by foreign invested banks remains modest. In 2014, the outstanding loans provided by the group of banks accounted for 8.28 percent, while the mobilized capital accounted for 8.19 percent.

However, an SBV report showed that the ROA (return on assets) of foreign invested banks in 2014 was 0.61 percent higher than the average ratio of the banking system at 0.51 percent.

The figures, according to Phan Hong Mai from the Hanoi Economics University, showed that foreign invested banks hold smaller market shares, but they have been operating well with effective asset exploitation and high level of capital safety.

She went on to say that once the limitations on foreign banks’ operations are removed, foreign banks will take action to increase their presence in Vietnam.

Malaysian MayBank and Singaporean DBS, for example, plan to open more branches in Vietnam. Public Bank Berhard has fulfilled necessary procedures to become a 100 percent foreign owned bank, while Singaporean UOB has applied for license.

Agribank, a Vietnamese commercial bank, has the biggest total assets – $33.278 billion, which is just a little bit higher than the fourth largest bank in Indonesia – Bank Negara Indonesia with $31.764 billion in total assets, and much lower than Singaporean UOB ($225.114 billion) and Malaysian Hong Leong Financial Group ($57.121 billion).


TBKTVN

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