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Foreign banks and financial organisations will have more room to operate in Viet Nam, leading to greater competition in the domestic banking sector, he said.
While Viet Nam permits foreign banks to hold a maximum 49 per cent stake in securities companies, they will eventually be permitted to operate fully foreign-invested and trade shares on the local stock markets, said the central bank governor.
Under the terms of a recent agreement with the US, besides establishing wholly foreign-invested branches in Viet Nam, international banks will have no limit on dong deposit holdings from legal entities, and will be permitted to issue credit cards starting on April 1 next year, Thuy said, adding representative offices will receive equal treatment to Vietnamese companies once Viet Nam joins the WTO.
Viet Nam banking sector must concentrate on addressing limited capital holdings and obsolete technology in its networks, he stressed, saying almost all the nation joint stock commercial banks have begun efforts to raise chartered capital holdings, many with a target of VND1 trillion by 2010, he said.
Leading the pack are the Asian Commercial Bank (ACB), the Viet Nam International Bank (VIBank), and the Viet Nam Export-Import Commercial Joint Stock Bank (Eximbank).
In addition to campaigns to increase their capital, domestic banks have made significant efforts to upgrade technology with financial support from the World Bank, the governor said.
Despite such efforts, the Vietnamese banking industry remains relatively undeveloped compared with other countries in terms of market promotions, and capital and technology potential, he said, noting that while foreign banks focus on the provision of financial services, Viet Nam banks are mainly engaged in credit services.
Viet Nam newly-ratified Banking Development through 2010 with Orientation through 2020 project requires domestic banks to raise their own capital adequacy ratio to 8 per cent against total assets, up from the current level of 3 to 4 per cent.
The State Bank of Viet Nam also plans to transform a number of State-run commercial banks into multi-functional economic groups capable of providing banking, insurance, stock brokerage, and asset management services, Thuy said.
Source: Vietnam News, June 24
