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 VIETNAM - Despite problems, banks still attractive enough to foreign investors

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PostSubject: VIETNAM - Despite problems, banks still attractive enough to foreign investors   Sat Nov 12, 2011 2:26 pm

November 12, 2011

Despite problems, banks still attractive enough to foreign investors

The pressure of the fierce competition in the banking sector and the ongoing bank restructuring process--both cannot lessen the attractiveness of the sector. Money keeps flowing into banks even in their most difficult period.

Coming in and going out

Three years ago, a big guy well-known among the Vietnamese bankers, who once very succeeded in the first development stage of Vietnamese joint stock banks, decided to set up a new bank. Everything got ready for him to make debut. However, the State Bank of Vietnam unexpectedly stopped licensing new banks.

However, the big guy never gives up the plan to set up a bank. After that, he became a member of the board of directors of a small bank at the invitation of the bank. However, investors believe that becoming a member of the board of directors is just the first step in his plan to make his intention to invest in the banking sector realistic. Meanwhile, the bank not only wants to use his good experiences and knowledge, but also his strong financial capability.

The change of the Vietnamese name of VP Bank in late 2010 once caught the special attention from the public. People well understand that the renaming was undertaken together with the changes of the board of directors and board of management, which has also led to the big changes in the business strategy of the bank.

Just several months ago, the public attention was drawn to the merger of Lien Viet Bank and Post Saving Company the multi-billion dong investment by the Vietnam Post and Telecommunication Group (VNPT) into the bank.

A series of new investment affairs has also been reported. Several days ago, local newspapers reported that PG Bank was facing difficulties when it tried to increase the chartered capital. However, sources from the bank said that a lot of investors are ready to pour more money into the bank, and they will disburse money right after the State Bank makes decision on the capital contribution mechanism applied to the shareholders, who are state owned enterprises.

The Gia Dinh Bank has successfully renamed into Ban Viet Bank (VietCapital Bank in English name) and increased its chartered capital. Right after Vietcombank, a big bank which holds 30 percent of Gia Dinh Bank’s stakes, withdrew from the bank, it has welcomed a new shareholder, who is also powerful.

A source told VietNamNet that a group of big shareholders has purchased stakes of Ban Viet Bank, now holding 30 percent of the chartered capital, the highest possible proportion.

Hanoi investors’ attention is now directed towards a “big guy” in the real estate sector who now reportedly wants to buy a big proportion of stakes of a southern bank. If he succeeds with the affair, he and his group would relocate the bank’s headquarter to the north and follow a new business strategy in developing the bank.

As such, though a lot of problems are reportedly existing in the banking system, the high profits of banks still make them attractive in the eyes of investors.

Gathering strength for restructuring

The State Bank of Vietnam and commercial banks in the country are now preparing for a restructuring process initiated by the government. Analysts say that the most important thing that needs to be done is to increase the capability and quality of banks. And of course, banks need to have money to do that.

An expert from the National Finance Supervision Council said that the first thing to do now is to “clean” the finance reports of banks, i.e. it is necessary to clear bad debts.

In the past, the government once had to spend 19 trillion dong to do that. However, at that time, the problem of banks was less serious, and the bad debt was smaller.

The State Bank of Vietnam has affirmed that it will not let any collapse to occur during the restructuring process. Commercial banks also believe that none will get dissolved or collapsed. And this is really a good reason to persuade those investors, who have money, to feel secure to continue injecting money in the banking sector.


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