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Higher foreign ownership ratio in local banks suggested
Bankers believe that the foreign ownership ratio in local banks should be higher than 30% as currently applied in order to generate more ‘enthusiasm’ from foreign partners.
Ten Vietnamese banks have decided to choose foreign bankers as strategic partners recently. These include ACB (which chose Standard Chartered Bank as its strategic partner), Sacombank (ANZ), Techcombank (HSBC), VP Bank (Singapore’s OCBC), Eximbank (SMBC), Habubank (Deutsche Bank), Phuong Dong (BNP Paribas), Phuong Nam (UOB), Seabank (Société Générale) and An Binh (May Bank).
Statistics show that the total assets of the 10 said banks are VND375,000bil. All the foreign partners are now holding high proportions of stakes in Vietnamese banks, at 10-15%, while HSBC is holding 20% of Techcombank.
A question which has been discussed for a long time is: What percent of stakes should Vietnam allow foreign strategic partners to hold? General Director of VP Bank Le Dac Son said that foreign partners are only enthusiastic about holding big proportions of stakes in local banks, and only then ready to share experience and technologies with local banks.
Son has suggested that the government of Vietnam raise the maximum foreign ownership ratio held by foreign strategic shareholders in local banks to 25% by 2010, and raise the total share proportion able to be held by foreign investors to 35% (the current figures are 20% and 30%, respectively). Son also said that it is necessary to conduct research now to find out what percent of stakes for foreign investors, 20%, 25% or 30%, would be the most suitable.
He added that foreign banks bring necessary support to help local banks develop modern services and share experiences in risk management. When OCBC’s ownership ratio was raised from 10% to 15%, OCBC reserved a sum of $8.2mil to help VP Bank upgrade its skills. Moreover, the foreign bank has also been providing training programmes on retail banking operations for VP Bank leaders.
The director of a joint-stock bank said that with 10% of stakes in hand, foreign bankers are not as ready as expected to share experience and transfer technologies.
However, Dr Nguyen Thi Mui, Deputy Head of the Finance Institute, said that it is necessary to follow a plan to gradually raise foreign ownership ratio, since banking is a sensitive field with many risks.
Mui said that the foreign ownership ratio in local banks may be lifted to higher levels, but the ratios must not be as high as the ratios for production companies.
“An overly rapid opening with an overly high foreign ownership ratio in the context of weak management skills could lead to foreign bankers dominating the domestic market,” Mui warns.
VNN
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