Vietnam creates stricter rules for new banks

Vietnam is restricting the establishment of new banks.

Among the regulations intorduced by the State Bank of  Vietnam is one that doubles the minimum asset requirement to US$4.75 billion.

Under the regulations, which will come into effect this February, founding shareholders of a bank are not allowed to be founders, owners or strategic investors in another credit institution. The restriction aims to prevent conflict of interest in the banking system and to make sure banking founders are not spreading their capital too thin, the central bank said.

Founding shareholders, before applying for a license to open a new bank, are required to make profits for five consecutive years, instead of the present three profit-making years.

The central bank plans to restructure the sector, aiming to have 10-15 large banks that can become “pillars” to support the financial system.

News webiste VnExpress cited central bank governor Nguyen Van Binh as saying on Friday that by 2015, Vietnam will have one or two banks with an asset base of around $50 billion that can compete with regional lenders.

Vietnam’s largest bank, state-owned Agribank, now has an asset base of just $25 billion, Binh said.

The country has 52 commercial banks, 51 branches of foreign banks, and many other non-bank credit institutions.