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Govt likely to stop granting licenses to new foreign banks
Thursday,  8/9/2018, 18:20 

Govt likely to stop granting licenses to new foreign banks

By Le Hoang

Deputy Prime Minister Vuong Dinh Hue (5th L) and M&A experts at the Vietnam M&A Forum 2018 - PHOTO: LE HOANG

HCMC – The Government will limit or even stop issuing licenses to new wholly foreign-owned banks but will allow foreign investors to acquire and restructure loss-making banks in Vietnam, Deputy Prime Minister Vuong Dinh Hue said at the Vietnam M&A Forum 2018 held in HCMC on August 8.

At the forum, themed, “New thrust, new era,” jointly held by Dau Tu newspaper and AVM Vietnam Company, Deputy PM Hue noted that the country will continue restructuring the finance-banking sector, and State-owned enterprises.

For the finance-banking sector, the Government plans to sell poor-performing banks, such as Construction Bank, Global Petroleum Bank and OceanBank, and part of the charter capital in Bank for Investment and Development of Vietnam and Bank for Foreign Trade of Vietnam to foreign investors. In addition, Vietnam Bank for Agriculture and Rural Development will launch its initial public offering next year.

As of mid-May, only nine foreign-invested banks had been allowed to operate in Vietnam.

Financial companies will also be restructured, the deputy prime minister said, adding that the Government has asked the relevant agencies to draw up detailed restructuring plans for the current 36-38 finance companies.

Besides this, by 2020, the Government will complete the divestment from State-owned firms to whom it had earlier sold part of its charter capital.

The Government will also restructure agro-forestry companies that have the necessary resources but lack good governance and capital, ensuring they take steps to attract investments. These firms will be restructured through equitization and conversion into two-member limited liability companies.

Hue highlighted the need to urgently restructure securities companies as the number of these firms in Vietnam is high, while their scale remains small.

According to Tran Van Dung, chairman of the State Securities Commission of Vietnam, 127 listed companies will continue their restructuring plans in the 2018-2019 period, including 64 firms this year. This will foster the development of the local mergers and acquisitions (M&A) market.

The ownership of foreign direct investment enterprises by local firms is unlimited, except for those operating in sectors subject to business conditions and regulated in international agreements that Vietnam has signed with other countries, Dung said.

Experts participating in the forum said that, with a population of nearly 100 million and free trade agreements that Vietnam has signed with other countries, the Vietnamese M&A market is attractive to foreign investors, especially those from South Korea, Japan, China, Thailand, Singapore and Hong Kong. Asian investors will continue to dominate the Vietnamese M&A market in the coming years, they predicted.

The most promising sectors for M&A include food and beverages, pharmaceuticals, real estate and banking.

The last 10 years has seen more than 4,000 M&A deals worth US$48.8 billion done. Last year alone, the total value of M&A deals reached a record high of US$10.2 billion.

However, experts proposed the Government improve the legal framework for M&As. Warrick Cleine, chairman and CEO of KPMG in Vietnam and Cambodia, and Seck Yee Chung of the Baker & McKenzie law firm called for the simplification of administrative procedures for M&A deals.

However, even though investors consider Vietnam a potential M&A market, they have expressed concern over the accuracy and transparency of Vietnamese enterprises’ background information, tax policies and administrative procedures, said Cleine.

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