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

As US Strikes Syria, China Sees Parallels at Home

Beijing is debating how much support to give international coalition against IS militants and trying to figure out how many Chinese nationals may have joined group overseas More

CDC: Ebola Could Infect 1.4 M by 2015

US health officials say if efforts to curb the outbreak are not increased, cases will soar dramatically by early next year More

Video USAID Provides $231 Million for Girls Education in 5 Countries

US Agency for International Development partners with celebrities to call attention to importance of education for girls worldwide More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Washington to Pyongyang: 'Shut This Evil System Down'i
X
Scott Stearns
September 23, 2014 10:52 PM
U.S. Secretary of State John Kerry is calling on North Korea to shut down prison camps and other human rights abuses following a United Nations Commission of Inquiry into "widespread and systematic human rights violations." VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Washington to Pyongyang: 'Shut This Evil System Down'

U.S. Secretary of State John Kerry is calling on North Korea to shut down prison camps and other human rights abuses following a United Nations Commission of Inquiry into "widespread and systematic human rights violations." VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video US, Gulf Allies Strike Islamic State Militants in Syria

United States forces have carried out strikes against Islamic State or ISIL militant positions in Syria - the first time Western forces have taken action on Syrian soil. Five U.S. allies from the Gulf joined the military action. Local reports suggest dozens of militants were killed. The U.S. also carried out unilateral missile strikes against a Syria-based terror group which Washington says poses an imminent threat to the West. Henry Ridgwell reports from London.
Video

Video High Intensity Focused Ultrasound Used to Kill Cancer Tumor

There is a new way of killing certain cancer tumors that allows the patient to go home on the same day. Surgeons at the Keck Medical Center of the University of Southern California became the first doctors to use this procedure on a patient with the help of high intensity focused ultrasound, or HIFU, and new robotic technology. Elizabeth Lee reports from Los Angeles.
Video

Video USAID Provides $231 Million for Girls Education in Five Countries

Hollywood stars Alicia Keys, Jennifer Garner and 30 others have voiced their support for a U.S.-backed initiative called "Let Girls Learn." The $231 million program, funded by the U.S. Agency for International Development, is aimed at ensuring public and quality education for girls worldwide. As VOA's Mariama Diallo reports, this new program will focus on five countries in Africa, South Asia, Latin America and the Middle East.
Video

Video UN: Relocation of Bedouins in Israel Weakens Two-state Solution

Rural Bedouins living in disputed lands east of Jerusalem could soon find themselves forcibly relocated. VOA's Sharon Behn reports from Jerusalem that while Israel defends the move as in the Bedouins’ best interests, the United Nations says the plan threatens the survival of the two-state solution with Palestinians.
Video

Video NASA’s MAVEN Probe Enters Mars Orbit

NASA’s newest Mars probe, called MAVEN, has successfully entered its designated orbit around the Red Planet. Scientists will use its sophisticated instruments to try to learn what happened to the atmosphere Mars had a few billion years ago. VOA’s George Putic has more.
Video

Video Prolonged Drought Plagues SW Oklahoma Farmers

Parts of western Texas and southwestern Oklahoma have been in drought conditions for several years running and the deficit in rainfall has taken a heavy toll on cotton and grain production. Oklahoma Governor Mary Fallin says the state has suffered $2 billion in agricultural losses since 2011. There has been rain in recent weeks, but, as VOA’s Greg Flakus reports from Altus, Oklahoma, for most farmers it has been too late.
Video

Video For West Ukraine City, Conflict Far Away Yet Near

The western Ukrainian city of Lviv prides itself on being both physically and culturally close to Western Europe. The Russian-backed separatists in the eastern part of the country are 1,200 kilometers away, and seemingly even farther away in their world view. Still, as VOA’s Al Pessin reports, the war is having an impact in Lviv.
Video

Video Saving Global Fish Stocks Starts in the Kitchen

With an estimated 90 percent of the world’s larger fish populations having already vanished, a growing number of people in the seafood industry are embracing the concept of sustainable fishing and farming practices. One American marine biologist turned restaurateur in Thailand is spreading the word among fellow chefs and customers. VOA Correspondent Steve Herman reports from Bangkok.
Video

Video Chinese Admiral Key in China’s Promotion of Sea Links

China’s President last week wrapped up landmark visits to India, Sri Lanka and Maldives, part of a broader campaign to promote a new “Maritime Silk Road” in Asia. The Chinese government’s promotion efforts rely heavily on the country’s best-known sailor, a 15th century eunuch named Zheng He. VOA's Bill Ide reports from the sailor’s hometown in Yunnan on the effort to promote China’s future by recalling its past.
Video

Video Experts Fear Ebola Outbreak ‘Beyond Our Capability to Contain’

Each day brings with it new warnings about the deadly Ebola outbreak already blamed for killing more than 2,600 people across West Africa. And while countries and international organizations like the United Nations are starting to come through on promises of help for those most affected, the unprecedented speed with which the virus has spread is raising questions about the international response. VOA's Jeff Seldin has more from Washington.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid

World Currencies

EUR
USD
0.7768
JPY
USD
108.84
GBP
USD
0.6124
CAD
USD
1.0999
INR
USD
61.042

Rates may not be current.