Vietnam is committed to allowing credit institutions of the European Union (EU) to hold up to 49% shares at two joint stock commercial banks in Vietnam when the European Union-Vietnam Free Trade Agreement (EVFTA) takes effect.
However, the commitment does not apply to four state-run banks including BIDV, Vietinbank, Vietcombank and Agribank, noted Luong Hoang Thai, head of the Multilateral Trade Policy Department under the Ministry of Industry and Trade at a conference today, June 5.
Following the Law on Vietnamese credit institutions, EU credit institutions will be allowed to hold 30% shares at most in other banks, including the four banks mentioned above.
Banking experts said that in terms of scale and management standards, the gaps between Vietnamese and EU banks remain large. While EU banks are applying the Basel III standards and moving towards the Basel IV standards, Vietnamese banks are still adopting the Basel II standards. Therefore, it is necessary to put in place certain strict regulations including the shareholding-level barriers.
The doors will open wider for EU banks to establish branches in Vietnam after the EVFTA comes into effect, thanks to the country’s commitment to creating favorable conditions for EU banks in certain banking and financial services. However, this could progress at a slow pace due to Vietnam’s small-sized banking and financial market.
Meanwhile, Vietnamese banks have recently opened branches in Europe and increased their presence in Southeast Asia. SGT
Experts have said that traceability is a challenge for Vietnam to boost export handicraft products to the EU in the future.
European investors are expected to stir mergers and acquisitions activities in the coming time as the landmark free trade agreement between the European Union and Vietnam nears ratification.