Illustrative image (Source: giaoduc.net.vn)

Hanoi (VNA) - The Government plans not to license any more wholly foreign-owned banks in Vietnam but encourages foreign banks to buy weak domestic banks, said Deputy Prime Minister Vuong Dinh Hue.

At a recent forum on mergers and acquisitions (M&A), the Deputy PM said that many foreign banks are also interested in M&A deals with weak domestic banks.

The Vietnamese Government was speeding up the resolution and restructuring of the country’s credit institutions, he said, adding that for commercial banks, the Government encouraged the M&A of small-sized banks into large-sized ones as the number of banks in Vietnam is still quite large and a reduction is inevitable.

Earlier, the Government also said that it expected restructuring of the banking sector through more M&A would help Vietnam have several major banks in the Southeast Asian region by 2021.

Besides, he said, the Government will organise the equitisation and divestment of State-owned banks in the future.

According to Deputy PM Hue, Agribank - one of Vietnam’s largest banks - has an initial public offering (IPO) roadmap set for 2019 while the Government also plans to reduce the State capital at the two large banks of BIDV and Vietcombank through share sales to foreign and domestic investors.

After a long period of staying quiet about M&A, some banks, including healthy ones, have recently revealed plans involving M&A.

At this year’s annual general meeting of shareholders in April, LienVietPostBank said that it was considering raising the charter capital, restructuring shareholders, completing a merger.

According to experts, M&A is an opportunity for banks to enhance financial capacity, expand markets and reach scale to achieve stronger growth. Besides, thanks to M&A, the Government does not have to exert much effort to handle the consequences of weak banks and help stabilise the financial market.

Vietnam has so far licensed nine wholly-foreign-owned banks, such as HSBC Vietnam, ANZ Vietnam, Standard Chartered Vietnam, Shinhan Vietnam and Hong Leong Vietnam, CIMB Vietnam, and United Overseas Bank (Vietnam).-VNA