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SBV prepares to recognise Vietnamese banking groups
While a lot of banking groups have been established and operating in reality, they still have not been legally recognised as banking groups.
On May 16, 2008, Saigon Thuong Tin Bank (Sacombank) officially announced the establishment of Sacombank finance group. This is the first private-owned finance group in Vietnam, with Sacombank being the nucleus, which regulates 11 group members.
As announced, Sacombank finance group operates under the mode of a conglomerate. Besides Sacombank, a lot of other banks have also announced operation under the mode of conglomerates, including Vietcombank, Bank of Investment and Development of Vietnam (BIDV), Vietinbank and Asia Commercial Bank (ACB).
However, according to the State Bank of Vietnam, the banking groups have not been legally recognised, which mean they still do not have legal status.
The compilers of the document said that commercial banks have been trying to diversify their operations, and they automatically think of setting up more subsidiaries, which leads to the establishment of banking groups.
A banking group could have a bank acting as holding company, and subsidiaries, joint-venture companies operating in non-bank fields.
A finance group could be a group of companies operating under the control of a parent company. This group of companies operates mainly in the three business fields of insurance, banking and securities.
There also could be multi-field groups, which operate in many business fields, including finance (banking, insurance and securities), and non-finance (construction, trade, shipbuilding).
Pham Huyen Anh, Deputy Director of the Banks and Non-bank Credit Institutions Department under the State Bank of Vietnam, stressed that the model of a banking group is a growing trend in Vietnam, and that a legal framework to stipulate the operations of banking groups needs to be set up.
If state management agencies do not promulgate suitable measures to supervise banking holding companies, members of banking groups (subsidiary companies, joint ventures, the organisations that have the power to control banks) could cause the collapse of banks and cause instability in the banking system as a whole.
The central bank is now drafting a legal document stipulating the organisation and operations of the subsidiaries belonging to commercial banks. It is collecting suggestions on the draft document, which is hoped will be promulgated before the end of the year.
VNN
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