Business
September 09, 2005
Vietnam may permit wholly foreign-owned banks
The State Bank of Vietnam has just proposed the government allow the establishment of 100 percent foreign-invested banks in the country in the coming years, local newspaper Vietnam News reported Friday.
Under a draft decree compiled by the central bank, foreign banks will be licensed to establish 100 percent foreign-invested businesses in Vietnam upon the condition that the banks are large,international-recognized and financially efficient.
The future decree also stipulates that at least 50 percent of a foreign-invested bank's chartered capital must be of one parent bank, which is legally obligated to support its subsidiary's operation in Vietnam.
The central bank has drawn up the draft decree to partially implement commitments that the government has made under the Vietnam-US Bilateral Trade Agreement, and planned to meet World Trade Organization entry requirements, the report said.
Now, limited operations of foreign banks are permitted in Vietnam, such as participating in joint ventures with local banks,and opening branches and representative offices.
Under the trade agreement, which took effect in December 2001, US banks can do business in the country in the next few years. With regard to banking services, US banks may establish joint ventures with Vietnamese partners, with US equity of 30-49 percent for the first nine years after the agreement goes into effect.
After the period, 100-percent subsidiaries are permitted.
As of mid-2004, Vietnam had housed five state-owned commercial banks, one policy bank, 34 commercial joint stock banks and 26 branches of foreign banks.
Source: Xinhua
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