1. The State Bank of Vietnam (SBV) limited Securities loans:

The central bank released Decision 03 on May 28, 2007, stipulating that commercial banks’ outstanding loans to securities investors must not be higher than 3% of the banks’ total outstanding loans as of December 31, 2007.

The decision faced strong opposition from banks and experts, who believe the central bank should not interfere in banks’ operations. Meanwhile, the central bank insisted that this is a necessary decision to ensure credit quality and minimize stock market risks.

2. Vietcombank’s equitization attracted domestic and foreign investors

Vietcombank’s equitization, which was delayed several times, was kicked off in December with the bank’s Initial Public Offering, 97.5mil shares were offered.

The average purchase price was VND107,860/share (the lowest successful bid was VND102,000/share, and the highest successful offer was VND250,000/share).

It remains unclear if the investors, who successfully won the right to buy Vietcombank’s shares, will follow through or drop out. It is estimated that individual investors will have to arrange VND4tril within one month to pay for the shares they have registered to buy.

3. SBV’s monetary policy was questionably successful

In 2007, Vietnam achieved an economic growth rate of 8.44%, the highest level in the last 11 years; considered the result of the central bank’s monetary policy that encouraged commercial banks to pump capital into the national economy.

However, the central bank has also been criticized for putting a lot of VND in circulation, which has resulted in record high inflation.

4. The stock market boomed

In 2007, enterprises mobilized VND90tril through the stock market, according to the State Securities Commission (SSC).

By the end of 2007, the total market capitalization value amounted to 39.4% of GDP, higher than the 22.7% level reached by the end of 2006. There are 250 share items listed on the official bourse, and 80 securities companies have so far been licensed.

5. Record overseas remittances

It is estimated that by the end of December 2007, some $4bil had been remitted to HCM City. However, overseas remittances may be higher as funds brought via unofficial channels (i.e. Viet Kieu bringing cash while visiting relatives).

7. Joint stock banks emerged and grew

By the end of 2007, Vietnam boasted 36 joint stock banks which saw growth rates two times higher than the average growth rate of the banking sector in 2007 and 2.5 times higher than the growth rate of State-owned banks.

The State Bank of Vietnam has just agreed to the establishment of four new joint stock banks, which have total chartered capital of VND10.5tril, equal to the total chartered capital of Hanoi’s eight operational joint stock banks

8. Foreign bankers and institutions expanded operations

By the end of 2007, Vietnam featured 35 foreign bank branches, five join venture banks, four financial leasing joint ventures and two 100% foreign owned financial leasing companies, coming from 14 countries and territories. The total assets of foreign bank branches and foreign invested credit institutions have reached VND215tril. The total pre-tax profit of these institutions was VND2.4tril.

The central bank received applications for the establishment of 19 new foreign bank branches and five 100% foreign owned banks, three of which have been approved in principle, including Australian Commonwealth Bank, South Korean IBK, and Taiwanese Fubon.

ANZ is planning to open 10-15 branches in Vietnam by the end of 2008, when it gets an operating license as a 100% foreign owned bank. HSBC and Standard Chartered Bank are also planning to open 100% foreign owned banks in Vietnam.

Many foreign bankers also tried to expand their operations in Vietnam this year by buying shares of local joint stock banks. HSBC increased its ownership of Techcombank to 15%, OCBC also upped its stake in VP Bank to 15%, Deutsche Bank purchased 10% of Habubank and Sumitomo Mitsui Banking Corporation purchased 15% of Eximbank.

9. SBV required higher compulsory ratio for deposits and withdrew money from circulation through open market operations in order to curb inflation

10. Banks developed modern technology products

Commercial banks have issued some 6mil ATM cards so far and installed 4,500 ATMs.

On October 25, 2007, a powerful card alliance was set up called Smartlink, headed by Vietcombank. Smartlink and Banknet. Another card alliance signed an agreement on connecting the two biggest ATM systems.

The year 2007 witnessed banks put Core Banking, a new technology, into use. It enables commercial banks to develop and offer several services, providing clients greater flexibility and tools.


Source: VietnamNet