Tin mới
Opportunities for foreign investment in banking sector (22/7)
22/07/2015 - 12 Lượt xem
Promising finance-banking market
Foreign investors have viewed a high growth
potential in emerging markets like Viet Nam, estimating it between two
and two-and-a-half times higher than GDP growth rate.
Experts predicted that the Vietnamese banking
market would expand by around 15% over the next ten years. Demands for
financial and banking services, especially credit cards, would rise
in new emerging markets including Viet Nam.
Realizing that trends, Vietnamese credit
institutions themselves have spared no effort to drastically restructure
their operations and improve their financial, administrative and
manpower capacity.
According to the latest survey of the Monetary
Statistics and Forecasting Department under the State Bank of Viet
Nam(SBV) announced on July 20, 99% of commercial banks were upbeat that
the credit growth would touch 18.2% this year. The figure was higher
than the SBV’s preset goal of 13-15%.
Lending interest rates would decline slightly and bad debts would fall to only 2.49% at the year end.
Bank holdings are expected to rebound following the
restructuring process. Hence, it is right time for foreign investors to
join the domestic market.
Since the first wave of wholly owned foreign banks
in 2008, Viet Nam is home to eight overseas lenders including HSBC (the
UK), Shinhan Bank (the Republic of Korea), ANZ(Australia); Standard
Chartered (the UK), Hong Leong(Malaysia) and Public Bank Berhad
(Malaysia).
These foreign banks have played an important role in supplying credit inflows for FDI and domestic enterprises.
Strategic partners are still reluctant
However, the World Bank on July 20 published an
Update on Viet Nam's Recent Economic Development” saying that despite
recent legal revisions that allow for exceptions to the foreign
ownership cap, there was no direct participation of foreign banks in any
of the recent M&As. While some of banks involved in recent deals
have had foreign investments, none of the transactions directly involved
foreign banks.
The WB attributed the result to a number of factors including lack of attractive banks and supportive regulatory framework.
While the cap for total foreign holdings remains
unchanged at 30% (consistent with Viet Nam’s WTO commitments), Decree
01, issued in January 2014 allows for higher foreign equity
participation in weak banks subject to the PM’s approval.
However, thus far, it appears that no foreign investors have been interested in the weak banks in Viet Nam.
They proposed increased foreign ownership even 100% instead of the current cap of 30%.
Opening up opportunities
According to economic experts, despite saturated
signs in the banking system, Circular 38/2014/TT-NHNN providing for
dossier, order and procedures for approving the foreign investors’
purchase of Vietnamese credit institution’s shares still offered great
opportunities for foreign players in Viet Nam.
The SBV targeted to cut the number of commercial
banks to only 15—17 in the next three years. The banking market would be
more open and less fierce.
In addition, in spite of violent competition,
foreign commercial banks in Viet Nam still own business opportunities as
they could provide other services which their Vietnamese peers are
unable. They could also take full advantage of their large and powerful
customer number including the FDI sector.
It is not easy for foreign investors
to obtain licenses to run wholly-owned foreign banks. Via M&As, they
could reform weak banks and utilize braches.
SBV Deputy Governor Nguyen Phuong Thanh said that
the SBV is willing to pave the favorable way and support voluntary
M&As in accordance with the legal regulations in favor of sound
monetary and banking system and realization of the banking restructuring
project.
More mergers on the horizon
The SBV on March 23 gave the green light, in
principle, to Malaysian bank - The Public Bank Berhad to turn VDP
Public, its joint venture in Viet Nam co-owned with the Bank for
Investment and Development of Viet Nam Joint Stock Company (BIDV), into a
wholly Malaysian-owned bank after acquiring BIDV’s stake.
Earlier, in March 2015, Kasikorn, Thailand’s
leading universal banking group opened a representative office in Ha Noi
and HCM City after installing service network via cooperation with
VietinBank and Agribank.
Other Japanese and Korean banks are also looking to set foot in Viet Nam./.
Source: Chinhphu.vn
Source: Chinhphu.vn
