Europe firms may purchase 49 percent in local banks
The Vietinbank logo at an office. The bank and three others - BIDV, Vietcombank and Agribank - cannot lift the foreign ownership cap in their capital after the EVFTA takes effect early next year as expected. (Photo vietnamfinance.vn))
The offer will be valid for five years after the Europe-Viet Nam Free Trade Agreement (EVFTA) takes effect, which is expected to occur early next year.
The EVFTA was signed between Vietnam and the European Union on June 30, 2019, opening opportunities for firms of both sides to tap the two markets with a total 600 million people.
Trang said that the offer does not apply to four joint-stock commercial banks, in which the State still holds the controlling stakes.
Those are the Joint Stock Commercial Bank for Investment and Development Bank of Vietnam (BIDV), the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), the Vietnam Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), and the Vietnam Bank for Agriculture and Rural Development (Agribank).
Under existing regulations, the maximum rate of foreign ownership in a commercial bank is set at 30 percent.
It is the “first come, first served” principle, meaning the first two banks signing up will be allowed to lift their foreign ownership cap from 30 percent to 49 percent, Trang said.
After the five-year deadline, the offer expires and any proposals will be rejected, she added. In the first five years from the effective date of the EVFTA, no new telecommunication segment is opened and no big changes are made with the industry, Trang said.
But after that period, European companies may be allowed to set up joint ventures with local businesses that have not invested in and constructed telecom infrastructure, she said. European investors may own a maximum of 100 percent of the joint ventures.
Vietnam will also allow foreign firms to purchase shares in local firms, set up joint-ventures and establish their representative offices in the country under the EVFTA in other sectors such as insurance and securities, the VCCI official said.
According to Trang, the EVFTA will help improve the business environment in Vietnam, especially making the financial sector more transparent.
“The financial and telecommunication industries are quite sensitive. Vietnam commits to opening opportunities for foreign firms to raise the sector’s competitiveness and development, thus boosting the country’s socio-economic development,” Trang said.
She urged local firms to renovate their technologies and business models as there will be very strong players coming from Europe.
Vietnamese companies need to prepare because European companies will flock to the domestic market in about five years, Nguyen Quy Quyen, an official at the international cooperation department of the Ministry of Information and Communications, said.
European companies, especially telecommunication firms, have very strong financial fundamentals, so they may dominate the domestic market, he said, adding there will be both opportunities and challenges for Vietnamese businesses.
But the five-year period from 2020 to 2025 will be a good time for Vietnamese firms to prepare, get stronger in every aspect, and study the ways European firms operate so that they become more competitive, said Vu The Binh, Vice Chairman and General Secretary of the Vietnam Internet Association.
Related News
SBV asks to issue revised decree on foreign ownership cap at Vietnamese banks
20:30 | 01/04/2023 Finance
Enterprises’ worry is being in the debt group for banks
13:39 | 31/03/2023 Import-Export
Being many "hot" issues at the general meeting of shareholders of banks
09:24 | 30/03/2023 Finance
Lifting the challenge of capital for businesses
14:52 | 19/03/2023 Import-Export
Latest News
Corporate bonds worth 1.1 billion USD issued in March
13:55 | 06/04/2023 Finance
Tax revenue is estimated at VND 426,922 billion in the first quarter
09:56 | 06/04/2023 Finance
Nearly 400 complaints about insurance distribution through banks on Ministry of Finance hotline
14:47 | 04/04/2023 Finance
Central bank starts huge credit package for social housing projects
14:42 | 04/04/2023 Finance
More News
In Q1, State revenue estimated to rise by 1.3%
13:28 | 04/04/2023 Finance
Consider raising the level of penalties to ensure fairness and transparency in the stock market
13:27 | 04/04/2023 Finance
Central bank cuts policy interest rates to spur growth
17:43 | 02/04/2023 Finance
Ensure policies to attract investment when implementing global minimum tax
10:33 | 02/04/2023 Finance
Solutions to attract FDI when implementing the global minimum CIT
11:38 | 01/04/2023 Finance
Effective implementation of tax incentives as driving force for growth in trade turnover between Vietnam and Cuba
13:43 | 31/03/2023 Finance
Bringing the policies on reducing land rent and water surface rent into life
15:41 | 29/03/2023 Finance
The more delayed the investment disbursement is, the more accumulated the capital expenditure will be
10:22 | 29/03/2023 Finance
Ministry of Finance summarizes the 10-year implementation of the Resolution of the 8th meeting of the 11th Central Committee
10:20 | 29/03/2023 Finance
Your care
The system has not recorded your reading habits.
Please Login/Register so that the system can provide articles according to your reading needs.
Corporate bonds worth 1.1 billion USD issued in March
13:55 | 06/04/2023 Finance
Tax revenue is estimated at VND 426,922 billion in the first quarter
09:56 | 06/04/2023 Finance
Nearly 400 complaints about insurance distribution through banks on Ministry of Finance hotline
14:47 | 04/04/2023 Finance
Central bank starts huge credit package for social housing projects
14:42 | 04/04/2023 Finance
In Q1, State revenue estimated to rise by 1.3%
13:28 | 04/04/2023 Finance