EVFTA paves way for European investors to contribute capital to Vietnam’s banks

Within five years from the day the FTA takes effect, Vietnam pledges to consider European credit institutions’ proposals to allow them to hold up to 49 percent of shares in two Vietnamese joint stock banks.

On February 12, 2020, the EU Parliament approved the FTA between the EU and Vietnam – EVFTA. The agreement will take effect after obtaining ratification by the Vietnam’s National Assembly, slated for May 2020, and approval from the EC.

EVFTA paves way for European investors to contribute capital to Vietnam’s banks



Under the agreement, European banks would have opportunities to hold up to 49 percent of shares in two Vietnamese banks, except the ‘big four’ - BIDV, VietinBank, Vietcombank and Agribank, where the state holds controlling stake.

Vietnamese banks are still undergoing restructuring, and therefore, their demand for finding foreign strategic shareholders and foreign capital is very high. In such conditions, EVFTA will bring more opportunities to Vietnamese banks to seek foreign partners.

Vietnamese banks are still undergoing restructuring, and therefore, their demand for finding foreign strategic shareholders and foreign capital is very high. In such conditions, EVFTA will bring more opportunities to Vietnamese banks to seek foreign partners.

Foreign capital has flowed to the Vietnam’s banking sector in the last few years. However, the capital is mostly from Asia, especially Japan, South Korea and some Southeast Asian countries. Only a few European names can be found in the list of banks’ foreign strategic shareholders.

 

French BNP Paribas invested in OCB in 2007, but left in early 2018. Societe Generale was once the strategic shareholder of SeABank in 2008, but withdrew its capital in early 2019.

Deutsche Bank Aktiengesellsfchaf was a strategic shareholder of Habubank in 2007, but since Habubank merged with SHB, the German bank’s ownership ratio in the new bank has dropped to below 5 percent.

Therefore, analysts hope that EVFTA will create a new European investment wave into Vietnam’s banks.

Under the EVFTA, the 49 percent ownership ratio is only applied to two banks. However, Thoi Bao Kinh Te Sai Gon commented that if things go smoothly, state management agencies may consider opening the banking sector more widely by allowing European investors to hold up to 49 percent of shares in more than two banks, or lifting the foreign ownership ratio limits in the remaining banks.

Currently, the ownership ratio that one foreign strategic shareholder can have in one Vietnamese bank must not be higher than 20 percent of chartered capital of the bank, while the total foreign ownership ratio in one bank must not be higher than 30 percent.

Experts said that with EVFTA, Vietnam’s banks not only can attract capital from the EU, but they will also have the opportunities to increase their presence in the EU.

At present, only a few Vietnam’s banks have networks in Europe. VietinBank opened a branch in Germany in 2011. BIDV has representative offices in Russia and the Czech Republic. Vietcombank has offices in France and Russia. 

Kim Chi

Electronics, seafood and garment industries to benefit the most from EVFTA

Electronics, seafood and garment industries to benefit the most from EVFTA

Vietnam is the second country in Southeast Asia, following Singapore, that has signed an FTA with the EU.

The EVFTA’s grand impacts on Vietnam’s industrial sector

The EVFTA’s grand impacts on Vietnam’s industrial sector

The EU-Vietnam Free Trade Agreement and Investment Protection Agreement raise many hopes for all of Vietnam’s economic sectors. 

 
 

Other News

.
Vietnamese businesses ready to be connected with “avenue” EVFTA
Vietnamese businesses ready to be connected with “avenue” EVFTA
BUSINESSicon  22/05/2020 

Economic cooperation between Vietnam and the European Union (EU) is about to turn a new page in history as the Vietnamese National Assembly is moving very close to ratifying the EU-Vietnam Free Trade Agreement (EVFTA).

Optimising the recovery route ahead for Vietnam as a whole
Optimising the recovery route ahead for Vietnam as a whole
BUSINESSicon  21/05/2020 

As the old saying goes, “What does not break you makes you stronger.” This is so true for Vietnam, not only throughout its rich history but also in the current context.

P/B, P/E ratios at five-year low, banks should be good options
P/B, P/E ratios at five-year low, banks should be good options
BUSINESSicon  21/05/2020 

With average price-to-earnings (P/E) and price-to-book (P/B) ratios at a five-year low, bank stocks are among the good options available for investors right now, analysts said.

National Assembly discuss EVFTA's implementation
National Assembly discuss EVFTA's implementation
BUSINESSicon  21/05/2020 

Vice President Dang Thi Ngoc Thinh said the EVFTA was a comprehensive and fair deal that represented both Vietnam and the EU's rights and interests at a National Assembly meeting on Wednesday in Hanoi.

IPs mushroom as Vietnam seeks to grab post-pandemic opportunities
IPs mushroom as Vietnam seeks to grab post-pandemic opportunities
BUSINESSicon  21/05/2020 

This month ground was broken for Viet Phat Industrial Park, one of the largest in the country, in Long An Province.

Proposal for ratification of EVIPA submitted to National Assembly
Proposal for ratification of EVIPA submitted to National Assembly
BUSINESSicon  21/05/2020 

Vice President Dang Thi Ngoc Thinh presented a proposal from the State President to the National Assembly (NA) for ratifying the EU-Vietnam Investment Protection Agreement (EVIPA), at the ninth session of the 14th NA in Hanoi on May 20.

Government actions not enough to revive business sector: academic
Government actions not enough to revive business sector: academic
BUSINESSicon  21/05/2020 

The Government needs to do more to revive the business sector, Dr Tran Hung Son, Deputy Director of the Institute for Development and Research in Banking Technology under the Vietnam National University-HCM City has said.

A repeat of the 2011-2013 real estate crisis?
A repeat of the 2011-2013 real estate crisis?
BUSINESSicon  22/05/2020 

With purchasing power dropping dramatically and liquidity becoming alarminging weak, the real estate market is witnessing a repeat of the 2011-2013 crisis.

Foreigners yet to be granted land use rights in Vietnam
Foreigners yet to be granted land use rights in Vietnam
BUSINESSicon  20/05/2020 

Foreign nationals entering Vietnam are not granted land use rights as enjoyed by local citizens, according to a statement made by the Ministry of Natural Resources and Environment.

Two more payment intermediary services licensed in Viet Nam
Two more payment intermediary services licensed in Viet Nam
BUSINESSicon  20/05/2020 

The State Bank of Viet Nam (SBV) has issued licences to two non-banking organisations to provide intermediary payment services.

Transferring solar projects to foreign investors 'normal': MoIT
Transferring solar projects to foreign investors 'normal': MoIT
BUSINESSicon  20/05/2020 

The Ministry of Industry and Trade (MoIT) has said that transferring all or part of a solar power project was normal according to market rules and the Investment Law.

Temporarily halting petrol and oil imports must be considered carefully: ministry
Temporarily halting petrol and oil imports must be considered carefully: ministry
BUSINESSicon  20/05/2020 

The proposal of temporarily halting the import of petrol and oil must be carefully considered to ensure national energy security and harmonise...

Vietnam slashes registration fee by half to rev up domestic car sales
Vietnam slashes registration fee by half to rev up domestic car sales
BUSINESSicon  20/05/2020 

The decision, set to valid until the end of 2020, would help customers save thousands of dollars.

Vietnam faces fierce competition to attract capital flight from China
Vietnam faces fierce competition to attract capital flight from China
BUSINESSicon  21/05/2020 

With its early success in containing the Covid-19 pandemic, Vietnam is having a jump-start among potential investment destinations in attracting a new wave of FDI.

Vietnam in strong position to defend against external shocks: HSBC
Vietnam in strong position to defend against external shocks: HSBC
BUSINESSicon  20/05/2020 

With fewer concerns about currency and external stability, Vietnam’s central bank is likely to be more comfortable with delivering interest rate cuts to support growth.

Vietnam’s North-South Expressway project gets fresh air
Vietnam’s North-South Expressway project gets fresh air
BUSINESSicon  20/05/2020 

Vietnam is stimulating key transport projects and other infrastructure ones to support development and economic recovery in post-Covid-19. And this is a good opportunity for investors.

Vietnam budget transparency score in 2019 significantly improved: OBS 2019
Vietnam budget transparency score in 2019 significantly improved: OBS 2019
BUSINESSicon  20/05/2020 

Overall, Vietnam is ranked 77 out of 117 countries and territories, up 14 places against 2017.

Vietnam raises monthly taxable personal income threshold by 22%
Vietnam raises monthly taxable personal income threshold by 22%
BUSINESSicon  20/05/2020 

With the new threshold in place, set to take effect from January 1, 2020 retrospectively, there would be more than 1 million people whose incomes are not taxable.

Decisive reforms needed for Vietnam to realize full benefits of EVFTA: WB
Decisive reforms needed for Vietnam to realize full benefits of EVFTA: WB
BUSINESSicon  20/05/2020 

The EU-Vietnam trade deal is the largest new-generation free trade agreement in Vietnam’s history in terms of direct benefits.

Hanoi announces lists of housing projects open for foreign ownership
Hanoi announces lists of housing projects open for foreign ownership
BUSINESSicon  20/05/2020 

Foreigners are eligible to own houses in a tenure of 50 years with renewal possibility.

 
 
 
Leave your comment on an article

OR QUICK LOGIN