VietNamNet Bridge – The regulation on setting up joint stock banks has been promulgated by the State Bank of Vietnam, paving the way for the establishment of more banks after a decade with no new banks.
With the aim of creating healthy competition in the market, while only allowing the most capable banks to be established, the central bank has set up strict requirements for candidate banks.
In order to get operation licences, banks must follow the strict requirements on chartered capital stipulated by the Prime Minister in different periods. From now until the end of 2008, the required chartered capital is VND1tril ($62.5mil) at minimum. After December 31, 2008, investors must have at least VND3tril to be eligible to set up banks.
Investors must make capital contributions to banks with their own money; they are strictly prohibited from making capital contributions with borrowed money.
Foreign investors are not allowed to make capital contributions to newly set up banks. They are only allowed to buy stocks of local banks which have been operating for two years at least. The foreign ownership in a local bank must not be higher than 30%.
A bank to be set up after the regulation comes into effect will have at least 100 shareholders, including three founding institutional shareholders who have the minimum assets of VND2tril and chartered capital of VND500bil.
In case the founding shareholder is a commercial bank, it must have the minimum total assets of VND10tril, chartered capital of VND1tril, and a bad debt ratio of below 2%. Shareholders are not allowed to transfer shares within three years of the day of licencing. Founding shareholders can only transfer shares among themselves within five years of the day of licencing.
Every institutional shareholder is allowed to hold 20% of the bank’s chartered capital at maximum. Individual shareholders are allowed to hold 10% of the bank’s chartered capital at maximum. Shareholders must get the Prime Minister’s approval to hold more than the above proportion of shares.
The regulation on setting up banks was promulgated on June 7 and will be valid 15 days after the regulation is published in the official gazette. Kieu Huu Dung, Director of the Banks and Non-banks Credit Institutions Department under the State Bank of Vietnam, said that right after the regulation came into effect the central bank would release a notice about receiving the applications for setting up new banks.
Twenty five applications for setting up joint stock banks have been sent to the central bank. All of them have the tentative capital sums of VND1tril and higher, and one of the banks has the impressive capital of VND3tril. However, Mr Dung said that the central bank would not consider any applications until the regulation came into effect.
State Bank Governor Le Duc Thuy stated at a meeting with the press in March that the central bank would not be soft in licencing new banks. Prior to that, experts warned that many investors would set up banks not for doing business themselves, but for reselling their operation licences.
(Source: VietNamNet, VNE) | 
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