Prime Minister Nguyen Xuan Phuc on August 8 approved the development strategy of Vietnam's banking sector, laying the foundation for the divestment of stakes at three leading state-run banks namely Vietcombank, BIDV and VietinBank.
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The state currently holds a 95.28% stake in Bank for Investment and Development of Vietnam (BIDV), 77.11% in Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietcombank) and 64.46% in Joint Stock Commercial Bank for Foreign Trade of Vietnam (VietinBank), according to financial data provider CafeF. All the three lenders are listed on the Ho Chi Minh City Stock Exchange.
Those three banks will proceed with the search of credible strategic investors, with the aim of listing in foreign stock exchanges in the future.
Additionally, Vietnam Bank for Agriculture and Rural Development, known as Agribank, after completing the equitization process, will be listed in the domestic market.
The government identifies Vietcombank, BIDV and VietinBank as Vietnam's leading banks in terms of scale, market share and market regulation in the 2021 - 2025 period, playing a pioneering role in applying Basel II standards. Notably, the minimum state capital at those three banks will be reduced from the current 65% to 51% during this period.
Overall, the banking system is set to develop in parallel with the socio-economic conditions in each development phase.
Specifically, the banking system will continue to undergo restructuring process in the 2018 - 2020 period, with a focus on solving bad debts and weak banks.
In the 2021 - 2025 period, banks are required to enhance their competitiveness, transparency and follow international standards in governance.
Vietnam is expected to have at least 2 - 3 commercial banks in Asia's top 100 largest banks in terms of assets and 3 - 5 banks listed in foreign stock markets by the end of 2025.
Moreover, bad debts ratio in credit institutions is set to be under 3%.
Banking sector restructuring as government's top agenda
According to Deputy Prime Minister Vuong Dinh Hue, the government is stepping up effort in equitizing and divesting state capital from state-run commercial banks. Among the list, Agribank is scheduled to launch its initial public offering in 2019, while BIDV plans to sell its stake to foreign investors.
Additionally, Vietnam intends to restructure nearly 40 financial companies under state-owned enterprises (SOEs)' management, including stake sales to domestic and foreign investors. At present, the State Bank of Vietnam (SBV) is drafting a plan to submit to the prime minister for approval, Hue informed at an M&A forum in Ho Chi Minh City on August 8.
In recent years, the revamp of credit institutions is one of the government's top priorities. For commercial banks, small-scaled banks are encouraged to merge into a larger ones. Besides, the government does not plan to issue license for establishing foreign-wholly owned banks, but is inviting foreign banks to purchase weak local commercial banks, Hue added.
