The State Bank of Vietnam, central bank of the country, has issued decision to ease restrictions on foreign bank branches and joint venture banks based in the country to build a more flexible banking environment.
The decision will allow these entities to open deposit accounts at overseas banks without restrictions, taking effect from next week.
The new decision overturns a 1992 regulation stipulating foreign bank branches in Vietnam can only deposit a maximum of 30 percent of their capital overseas, and joint venture banks can only deposit 10 percent.
The moves are part of the central bank�€™s policy to create a level playing field for foreign financial institutions in Vietnam, the experts said.
The decision repeals another regulation that foreign bank branches and joint venture banks must deposit 15 percent of their capital at the SBV when they start operating in Vietnam.
An official from the State Bank said the SBV is also working on the amendment of Decree 13, which governs the organization and performance of foreign banks in Vietnam, and expects it to be finished by year end.
The amendment will allow foreign banks to establish a new bank status as a Vietnamese legal entity, instead of being restricted to setting up as branches or joint ventures.
The amendment also removes restrictions on personal deposits in Vietnamese dong, currently set at 50 percent of the banks�€™ ownership capital.
There are now 27 foreign bank branches and four joint venture banks in Vietnam that recorded average profit growth of 23 percent in 2003.
VNCG-VDC1 - (02/04/2004)