The State Bank of Vietnam (SBV)'s Governor Nguyen Van Binh has approved Sai Gon Thuong Tin Bank (Sacombank) opening a wholly-owned subsidiary bank in Laos.

This will pave the way for the lender to further expand services into neighbouring countries.

The new bank, named Sai Gon Thuong Tin Bank Lao Ltd. (Sacombank Lao), will be headquartered in Vientiane's Hengboun Street and have a charter capital of 39 million USD.

Sacombank Lao will be part of the transformation of the existing branch of Sacombank in Laos, which was opened in late 2008. Under Laos' regulations, foreign banks are allowed to establish a wholly-owned subsidiary bank only after a year of its branch being operational in Laos.

As per the SBV's approval, Sacombank will have to open its new bank in Laos within two years of the approval. Sacombank Lao's duration of operation would be defined as long as the mother bank was still operated. It would be allowed to execute banking activities in Laos in accordance with Lao and Vietnamese laws.

In case Sacombank Lao received an investment licence granted by Lao authorities, Sacombank would have to report to the SBV within 14 days before the launch of the new bank.

Earlier, Sacombank's Director Phan Huy Khang said that Lao authorities also approved in principle for Sacombank to set up a wholly-owned subsidiary bank in Laos.

Sacombank is among Vietnam's first banks to do business in Laos. The other Vietnamese banks, which operate in Laos, include Vietcombank, BIDV, Vietinbank and Sai Gon Hanoi Bank (SHB).

Apart from Sacombank, the central bank in January allowed Vietinbank to set up its wholly-owned bank in Laos by upgrading its existing branch.

SHB has also revealed its plan to open a wholly-owned unit in Laos.

Along with Laos, Cambodia is also a target market for Vietnamese banks, considering the current presence of BIDV, Sacombank, Agribank, Military Bank and SHB in the country and owing to its potential for tourism, mining, hydropower, oil and gas, and industrial plants.-VNA