Foreign investors will gain considerable benefits from buying "zero dong" banks due to their nationwide networks and wide range of customers.
Tran Du Lich, a renowned economist, said in an interview given to the local press recently that it is now the right time for the State Bank to quit zero-dong banks, i.e. banks it bought for zero dong.
After a period of reshuffling, the banks have become stronger and should be sold.
Ngo Huong, former rector of the HCMC Banking University, and Bui Quang Tin, now lecturer of the school, both agree with Lich, saying that if the central bank lets the banks go, investors would be able to buy the banks, thus helping accelerate the restructuring process.
Tin pointed out some special characteristics of the zero-dong banks.
First, the central bank, after taking over the zero-dong banks, has assigned the Big Three (three big state-owned banks – Vietcombank, VietinBank and BIDV) to manage the banks. If the central bank sells the zero-dong banks, the banks would be managed by their management boards in accordance with current laws.
Second, the zero-dong banks can receive support from the State Bank in terms of liquidity, i.e. they can use the refinanced capital from the State Bank.
Third, the structure of the apparatus of the banks is nearly the same as the big banks’.
Tin believes that many foreign investors will be interested in Vietnam’s zero-dong banks.
“The banks (Ocean Bank, CB Bank and GP Bank) were weak banks which were forced to transfer to the central bank at zero dong, but they still have customers, hold certain market shares and run large networks of transaction offices throughout the country,” he explained.
“The banks were sold to the central bank at the price of zero dong, but after a period of reshuffling, they have got better. Therefore, their value will be higher,” he added.
If foreign investors take over the zero-dong banks, they would get big benefits. First of all, they would own new banks in Vietnam while they don’t have to spend time on procedures, building networks and branding.
“Everything will be ready for foreign bankers and they will just need to activate the banks with their staff; the banks will run well and make profit immediately,” he said.
Commenting about the value of zero-dong banks, Huong said in these banks, liabilities are bigger than assets, but foreign investors would buy the banks’ stakes for many dong if they find they can exploit the banks’ assets.
He believes that it would be a good thing to sell the banks to foreign investors, if the investors can improve the banks’ operation.
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-Compiled by VietnamCredit-