Banks/Banking in Vietnam

Adhering to the 1976 reorganization, the State Bank of Vietnam became the Central Bank. The state bank was formerly the National bank of Vietnam. The state bank assumed the duties of commercial banks, besides its national financial responsibilities.

It had numerous provincial branches and the other significant banks that were operating in 1988 in Vietnam included Foreign Trade Bank overseeing various foreign payments aspects and Bank for agricultural development that offered loans to fishing and agriculture.

Current status

The banks in Vietnam suffer owing to low public confidence, non-performing loans to high levels, managerial and regulatory weakness, absence of international auditing and non-compliance with Basel capital standards. The banking in Vietnam is a blend of state-owned, joint-venture, joint-stock and foreign banks.

However, the state-owned commercial banks predominate and suffer owing to NPL high levels such that most of these banks in Vietnam are state-owned enterprises.

Vietnam plans to encourage the transparency of financial system by launching a credit-rating agency. Large foreign banks balance their interest in catering to multinationals in Vietnam and pursue restricting other activities. The system of banking in Vietnam is cash-based, yet nearly 300 to 400 ATMs (automated teller machines) are installed, besides 350,000 debit cards are also in circulation.

Role of Banks

The state banks dominate the complete system of banks in Vietnam, although the main borrowers are state enterprises and the lending is short-term owing to skewed structure of interest rate. After 1992 banking reorganization, Vietnam has become more diversified including state-owned joint-stock, foreign banks and joint-venture providing services to customer base.

The foreign representative bank arrived in 1989 and in 1992 the foreign banks were given permission to operate commercial branches. As on 1998 December, there were several joint-stock banks, joint-venture banks, foreign bank branches and foreign banks with offices, besides the 4 state-owned commercial banks.

The foreign trade bank in the aim of attracting foreign exchange opened accounts for overseas Vietnamese remittances. These currencies dealt with French francs, Hong Kong dollars, United States dollars, Swiss francs, British pounds, Canadian dollars, Australian dollars, Japanese yen and Deutsche Mark.

The top bank in Vietnam is State Bank of Vietnam and has numerous branches within the territory. Foreign exchange is also regulated by the foreign trade bank and also provides loans to fishing and agricultural sectors.