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VietNamNews

Bar set higher for bank branches

Update: December, 12/2012 - 10:53

HA NOI (VNS)— A bank would need to have VND300 billion (US$14.28 million) in charter capital in order to open a branch in Ha Noi or HCM City, trippling the current stipulated level, according to a draft circular from the State Bank of Viet Nam.

According to the draft, all banks would be allowed to open a maximum of 10 branches each city. Banks that had been operational for more than 12 months would be permitted to open no more than five branches a year, while others would be limited to three.

It also regulates that every branch could establish a maximum of five transaction bureaus, with no more than two to be opened within a year.

It noted that banks must continue to control their bad debt ratios at no more than 3 per cent of their total outstanding loans, or lower levels possibly stipulated by State Bank Governor Nguyen Van Binh, if they wanted to establish a new domestic branch.

Industry insiders said that this explained why many banks had struggled to open new branches in recent months because bad debt ratios were over 3 per cent.

Banks planning to set up foreign branches must have been operational for at least three years with VND10 trillion (US$476.2 million) in equity and VND100 trillion ($4.76 billion) in total assets. They also needed to have been profitable for three consecutive years.

The State Bank said it was collecting opinions about the draft circular and the Viet Nam Banks Association said it would hold a meeting early next week to consult members.

The central bank announced plans to tighten regulations regarding the establishment of branches and transaction bureaus over a year ago. — VNS

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