VietNamNet Bridge – There has been no sign showing that the State Bank would increase the ceiling foreign ownership ratio in the Vietnamese weak banks to be restructured, even though the solution was mentioned in the plan on credit institution restructure.

Foreign banks cherish high hopes

Sources say that it’s not very likely that the State Bank would call on foreign investors to join the bank debt trading market, or it would lift the ceiling foreign ownership ratio in domestic banks, even though foreign investors are believed to be the most financially capable investors in the market.

Meanwhile, foreign banks still cherish a high hope that the bank reshuffle would be a golden opportunity for them.

Louis Taylor, Chief Executive Officer (CEO) of Standard Chartered Bank Vietnam, said there would be no easy solution for the bad debt settlement. However, he advocates the idea that it’s necessary to allow higher foreign ownership ratio in Vietnamese banks.

This proves to be the quickest way allowing to increase the capital flow to the banking system. This is also the quickest way for Vietnamese banks to apply international standards in corporate governance and risk management. As such, this would help the government of Vietnam obtain its goals quickly.

Tran Anh Vuong, Deputy Chair of the Hanoi Young Entrepreneurs’ Association, said that a lot of European groups now want to flock to Asia. Therefore, if Vietnam raises the allowed ceiling foreign ownership ratio in Vietnamese banks, it would successfully attract a huge sum of capital to the banking sector.

Managers of foreign banks, when answering the questions raised by reporters, all affirmed that banking is the attractive investment sector.

However, foreign investors still keep the wait-and-see attitude, waiting for the next moves to be taken by the government. If Vietnam does not lift the cap on the foreign ownership ratio, it would be venturous for foreigners to inject money in banks at this moment.

The credit institution restructure plan for the 2011-2015 period allows foreign credit institutions to buy or merge Vietnamese banks, and increase foreign ownership ratios in the weak banks which are subject to be restructured.

However, the solution has not been considered yet.

Dr Nguyen Tri Hieu, an economist, has noted that in the context of the domestic capital getting exhausted, Vietnam needs to apply a reasonable mechanism to attract foreign investment capital. Hieu thinks that the foreign ownership ratio in Vietnamese banks should be raised to 40 percent in order to attract capital to the banking sector.

“In the future, when the banking sector’s health gets stable, Vietnam should think of opening the banking sector entirely,” he said.

Banks would be sold, but not cheaply

Governor of the State Bank of Vietnam Nguyen Van Binh said that lifting the ceiling foreign ownership ratio in Vietnamese banks is an important solution to the credit institution reshuffle. However, he warned that if this cannot be managed well, the nation’s benefits would be influenced.

According to Binh, Vietnam’s national economy is experiencing the darkest days, when bank stocks have become very cheap. Therefore, if the ceiling foreign ownership ratio is lifted, it may happen that foreign banks would rush to buy domestic banks, which means that the Vietnamese banking sector would fall into the hands of foreigners.

In other words, according to Binh, if selling banks at this moment, Vietnam would get “small change,” while the banks are worth big sums of money.

“It’d be better to make the banking sector healthier, which would force foreign banks to pay reasonable prices to buy the banks. As such, we would be able to ensure the benefits of domestic investors and force foreigners to pay reasonable prices for bank stocks,” Binh said.

Dr Vu Viet Ngoan, Chair of the National Finance Supervision Council, believes that Vietnam can absolutely carry out the bank restructure, while no need to depend on foreign capital sources.

Source: DTCK