News / Economy

Vietnam Hints at Lifting Cap on Foreign Ownership of Banks

FILE - A man counts money he withdrew from an ATM machine at the headquarters of the Bank for Investment and Development of Vietnam in Hanoi.FILE - A man counts money he withdrew from an ATM machine at the headquarters of the Bank for Investment and Development of Vietnam in Hanoi.
x
FILE - A man counts money he withdrew from an ATM machine at the headquarters of the Bank for Investment and Development of Vietnam in Hanoi.
FILE - A man counts money he withdrew from an ATM machine at the headquarters of the Bank for Investment and Development of Vietnam in Hanoi.
Vietnamese officials said this week they would be willing to raise the ceilings on foreign ownership of banks once the restructuring of the banking sector stabilizes.
 
The officials would not commit to a timeline or a new percent cap. But one adviser, drawing on the experience of South Korea and Japan, said it could take Vietnam five to 10 years to clean up the banks, which have the highest bad debt ratio in Southeast Asia.
 
“We have to make our own system healthy again before we feel comfortable to open up,” said Hoang Xuan Hoa, economic director of the central economic committee that advises the government.
 
Speaking Tuesday at a seminar held by the Ministry of Planning and Investment and the European Chamber of Commerce in Vietnam, Hoa added, “We don’t have to wait till everything is OK before we open up for foreign investors, but it’s a process.”
 
The overall limit for foreign stakes in Vietnamese banks is 30 percent. Of that portion, foreign individuals are allowed no more than 5 percent, organizations 15 percent, and strategic investors 20 percent. Vietnam raised those levels in February, before which organizations could hold just 10 percent and strategic investors just 15 percent.
 
While open to an eventual hike in the foreign cap on top of the changes in February, Nguyen Manh Hung, a manager at the State Bank of Vietnam, cautioned against the risk of capricious investors. He said carpetbaggers might invest here but then pull out at the first sign of trouble in Vietnam, or in response to issues in their home markets, such as the current drawdown of quantitative easing in the United States.
 
“They may be in for a quick buck, and then withdraw capital anytime they see problems,” said Hung, who heads the SBV’s Banking Strategy Institute. “We need to look for long-term commitments from investors. We don’t want to pay the price of capital flight.”
 
Despite his reticence, Hung acknowledged “there’s a big need for capital to restructure the banking sector.”
 
Overhaul


Vietnam is in the process of a major banking overhaul, which is seen as necessary to lift the country out of its years-long slump in GDP growth. Officials have told banks to merge, divest from non-core businesses, resolve cross-ownership issues, and cut their burden of loans that go sour. To buy up some of those toxic loans, Vietnam formed an asset-management company in July.
 
“High non-performing loans continue to plague banks' balance sheets with various estimates ranging from the official number of 3.79 percent to Moody's estimate of 15 percent,” ANZ said in a statement this week.
 
Foreigners say they could help ease the load of bad debts at Vietnamese lenders, but their stakes are not high enough to justify pumping more resources into the struggling banks.
 
“Thirty percent doesn’t give us sufficient incentive or control to come in and resolve these issues,” EuroCham director Paul Jewell said.
 
Hung complained that foreign investors say they want to buy more shares in Vietnamese banks, yet have not made use of the allotments in place. But bankers responded that they haven’t been interested because the ceiling is too low. They said the government would have to let foreigners own 49 percent, or even 51 percent, of a bank to make the investment worthwhile.
 
At the end of the seminar, the president of the planning ministry’s Development Strategy Institute said he found the bankers’ arguments “persuasive.” Bui Tat Thang promised to take the recommendations to the government, saying, “I think the relationship between foreign ownership caps and participation in banks is very important.”

You May Like

Beloved Lion Killing Sparks Virtual, Real Life Outrage

Twitter, as usual, was epicenter for anger directed at Palmer, with some questioning his manhood, calling for him to be released into the wild More

Video Booming London Property Market a Haven for Dirty Money

Billions of dollars from proceeds of crime, especially from Russia, being laundered through London property market, according to anti-corruption activists More

Video Scouts' Decision on Gays Meets Acceptance in Founder's Hometown

One former Scout leader thinks organization will move past political, social debate, get back to its primary focus of turning boys into good citizens More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Booming London Property a ‘Haven for Dirty Money’i
X
July 29, 2015 9:34 PM
Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Booming London Property a ‘Haven for Dirty Money’

Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Scouts' Decision on Gays Meets Acceptance in Founder's Hometown

Ottawa, Illinois, is the hometown of W.D. Boyce, who founded the Boy Scouts of America in 1910. In Ottawa, where Scouting remains an important part of the legacy of the community, the end of the organization's ban on openly gay adult leaders was seen as inevitable. VOA's Kane Farabaugh reports.
Video

Video 'Metal Muscles' Flex a New Bionic Hand

Artificial limbs, including the most complex of them – the human hand – are getting more life-like and useful due to constant advances in tiny hydraulic, pneumatic and electric motors called actuators. But now, as VOA’s George Putic reports, scientists in Germany say the future of the prosthetic hand may lie not in motors but in wires that can ‘remember’ their shape.
Video

Video Russia Accused of Abusing Interpol to Pursue Opponents

A British pro-democracy group has accused Russia of abusing the global law enforcement agency Interpol by requesting the arrest and extradition of political opponents. A new report by the group notes such requests can mean the accused are unable to travel and are often unable to open bank accounts. VOA's Henry Ridgwell reports.
Video

Video 'Positive Atmosphere' Points Toward TPP Trade Deal in Hawaii

Talks on a major new trade agreement among 12 Pacific Rim nations are said to be nearing completion in Hawaii. Some trade experts say the "positive atmosphere" at the discussions could mean a deal is within reach, but there is still hard bargaining to be done over many issues and products, including U.S. drugs and Japanese rice. VOA's Jim Randle reports.
Video

Video Genome Initiative Urgently Moves to Freeze DNA Before Species Go Extinct

Earth is in the midst of its sixth mass extinction. The last such event was caused by an asteroid 66 million years ago. It killed off the dinosaurs and practically everything else. So scientists are in a race against time to classify the estimated 11 million species alive today. So far only 2 million are described by science, and researchers are worried many will disappear before they even have a name. VOA’s Rosanne Skirble reports.
Video

Video Scientists: One-Dose Malaria Cure is Possible

Scientists have long been trying to develop an effective protection and cure for malaria - one of the deadliest diseases that affects people in tropical areas, especially children. As the World Health Organization announces plans to begin clinical trials of a promising new vaccine, scientists in South Africa report that they too are at an important threshold. George Putic reports, they are testing a compound that could be a single-dose cure for malaria.
Video

Video 'New York' Magazine Features 35 Cosby Accusers

The latest issue of 'New York' magazine features 35 women who say they were drugged and raped by film and television celebrity Bill Cosby. The women are aged from 44 to 80 and come from different walks of life and races. The magazine interviewed each of them separately, but Zlatica Hoke reports their stories are similar.
Video

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.
Video

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.
Video

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.
Video

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.
Video

Video Racially Diverse Spider-Man Takes Center Stage

Whether it’s in a comic book or on the big screen, fans have always known the man behind the Spider-Man mask as Peter Parker. But that is changing, at least in the comic book world. Marvel Comics announced that a character called Miles Morales will replace Peter Parker as Spider-Man in a new comic book series. He is half Latino, half African American, and he is quite popular among comic book fans. Correspondent Elizabeth Lee reports from Los Angeles.
Video

Video Historic Symbol Is Theme of Vibrant New Show

A new exhibit in Washington is paying tribute to the American flag with a wide and eclectic selection of artwork that uses the historic symbol as its central theme. VOA’s Julie Taboh was at the DC Chamber of Commerce for the show’s opening.

VOA Blogs

World Currencies

EUR
USD
0.9066
JPY
USD
123.75
GBP
USD
0.6394
CAD
USD
1.2954
INR
USD
63.904

Rates may not be current.