A new regulation drafted by the State Bank of Vietnam (SBV) will set out more detailed ground rules for the establishment of new joint-stock commercial banks.
Under the latest draft of the circular, each new bank would be required to have at least three institutional founding shareholders. The founding shareholders would be required to together own at least 50 per cent of the bank’s charter capital, while the institutional founding shareholders would be required to hold at least 50 per cent of the total capital held by all founding shareholders.
Within the first five years of a new bank’s operation, founding shareholders may not transfer common shares, unless they do so among them. Preferential shares of founding shareholders would be convertible into common shares three years after the establishment of the bank.
The draft circular also tightens the rules on what institutions or persons could act as founding shareholders of a new joint-stock bank.
Under the proposed regulation, an existing bank with at least VND 50 trillion (USD 2,63 billion) in assets and a bad debt ratio of less than 2 per cent could act as a founding shareholder for a new joint-stock bank.
State-owned enterprises wishing to establish a new bank must obtain approval from the Prime Minister. They must also have at least VND 500 billion (USD 26.3) million) in equity and have performed profitably for at least five consecutive years.
Under the draft circular, founding shareholders and their relatives would be banned from establishing more than one bank. An institution which holds 10 per cent of the charter capital of an existing bank would also not be permitted to set up a new bank.
The State Bank put a freeze on the establishment of new commercial banks back in August 2008 due to a proliferation of new banks. Since then, only three banks have been licensed - Bao Viet Bank, Lien Viet Bank and Tien Phong Bank - each backed by a powerful corporate shareholder.
The new circular, once approved, would likely coincide with a lifting of that freeze.-