- Banking in Vietnam
=History=
Following its reorganization in 1976, the
State Bank of Vietnam (formerly the National Bank of Vietnam) became the central bank of the country. In addition to its national financial responsibilities, the State Bank also assumed some of the duties of a commercial bank. It maintained a head office inHanoi , a division inHo Chi Minh City , and numerous provincial branches. Other important banks operating in Vietnam in 1988 included the Foreign Trade Bank, which was charged with overseeing all aspects of foreign payments, and the Bank for Agricultural Development, which provided loans toagriculture andfishing . [http://lcweb2.loc.gov/frd/cs/vntoc.html Vietnam country study] .Library of Congress Federal Research Division (December 1987). "This article incorporates text from this source, which is in thepublic domain ."]The first solely commercial bank opened in Ho Chi Minh City in July 1987 to handle personal savings and to extend
loans to enterprises and individuals. The bank was capitalized with D500 million (US$1.4 million) provided by the government and through stock issues. One objective in establishing Vietnam's first commercial bank was to limitinflation through the bank's ability to coordinate the extension ofcredit .To attract more foreign exchange, the Foreign Trade Bank opened an account in 1987 for overseas Vietnamese remittances of foreign currencies to their relatives at home. The currencies dealt with were
United States dollars ,French francs ,Swiss francs ,Hong Kong dollars ,Canadian dollars ,British pounds ,Japanese yen ,Australian dollars , andWest German marks . In 1987 the bank also agreed to establish a finance company inTokyo in partnership with a Japanese bank. As the first joint venture between the two countries, the proposed company was intended to help settle bilateral trade accounts, but it was also expected to assist in technology transfers.Current status
Vietnam’s banks suffer from low public confidence, regulatory and managerial weakness, high levels of
non-performing loans (NPL), non-compliance with the Basel capital standards, and the absence of international auditing. Since 1992 Vietnam’s banking system has consisted of a combination of state-owned, joint-stock, joint-venture, and foreign banks, but the state-owned commercial banks predominate, and they suffer from high levels of NPL, most of them to state-owned enterprises. Consequently, in September 2005 Vietnam decided to equitize all five state-owned banks—a change from previous plans to equitize only two of them. In addition, Vietnam plans to boost the transparency of its financial system by establishing a credit-rating agency and performance standards for joint-stock banks. Large foreign banks are balancing their strong interest in serving multinationals in Vietnam and frustration with continuing restrictions on their activities. Although Vietnam is a cash-based society, 300 to 400automated teller machines (ATMs) have been installed, and about 350,000debit cards are in circulation. [http://lcweb2.loc.gov/frd/cs/profiles/Vietnam.pdf Vietnam country profile] .Library of Congress Federal Research Division (December 2005). "This article incorporates text from this source, which is in thepublic domain ."]References
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