Vietnam eyes foreign investment boost for banking sector

October 18, 2023 | 16:53
(0) user say
At the meeting conference between the prime minister and foreign investors on October 17, Pham Thanh Ha, Deputy Governor of the State Bank of Vietnam (SBV), gave a warm welcome to foreign investors as they stood ready to address the challenges faced by underperforming Vietnamese banks.
Vietnam eyes foreign investment boost for banking sector

At the conference, Minh Do, country director of Warburg Pincus, said, "It's essential for the Vietnamese government to re-evaluate strategies to raise capital for domestic banks." Minh Do went on to suggest an expansion of the foreign ownership limit could foster credit growth.

Addressing this, Ha reiterated the current regulations, which permit foreign investors to own a maximum of 30 per cent of a domestic credit institution.

According to Deputy Minister of Finance Cao Anh Tuan assets of foreign-invested enterprises (FIEs) in the finance, banking, and insurance sector account for approximately 10 per cent of total foreign direct investment assets.

"The SBV is also restructuring domestic credit institutions and prioritising increased ownership for investors that can help transform and renew underperforming banks. Foreign investors can actively participate in addressing these weaker banks," Ha said.

Reiterating the importance of foreign direct investment for Vietnam's socioeconomic development, Ha said, "The long-term and sustainable investment strategies of FIEs are highly commendable. However, considering the financial and monetary security of an open economy like Vietnam's, the SBV needs to be cautious with capital flows to ensure the stability of the financial market."

Ha made assurances that the SBV will continue to ensure liquidity for the economy, an action critical for the financial environment, businesses, residents, and FIEs alike, and that the institution strives for stability and flexibility when setting interest rates.

"This year, the SBV is among the few central banks that could reduce operational interest rates. As a result, the market rates have decreased, allowing businesses and foreign investors better access to capital and credit at lower costs," Ha added.

Singapore's GIC eyes potential M&A deal in Vietnam's retail sector Singapore's GIC eyes potential M&A deal in Vietnam's retail sector

The Singapore-based sovereign wealth fund GIC and other investors are vying to scoop up a 20 per cent stake in Bach Hoa Xanh, Mobile World’s grocery store chain.

VPBank announces plans to take over weak bank VPBank announces plans to take over weak bank

Amidst the larger backdrop of restructuring within Vietnam's banking sector, VPBank has taken centre stage, declaring its readiness and financial capability to acquire a struggling bank. This bold step signals the bank's commitment to strengthening the country's banking ecosystem.

Bigger banks hoover up weaker rivals Bigger banks hoover up weaker rivals

Prominent Vietnamese banks are making calculated moves to acquire struggling counterparts, signalling a broader restructure of Vietnam’s banking system.

By Lam Tien

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional