| Vietnam issues strict regulations on establishing new banks |
HANOI, June 14 (Xinhua) -- The central bank of Vietnam recently released more severe rules to restrict the establishment of new commercial joint stock banks, Vietnam News newspaper reported Thursday.
According to a decision issued on June 7 by the State Bank of Vietnam, a new bank must have at least 1 trillion VND (about 62.5 million U.S. dollars) in charter capital when it is set up, and must raise the figure to 3 trillion VND (187.5 million dollars) by the end of 2008.
If a founding shareholder in the new bank is another bank, the shareholder must have total assets of at least 10 trillion VND (625 million dollars), bad debt rate down to less than 2 percent of outstanding loans, and be profitable over the last three years. If a founding shareholder is a company; it must have capital of at least 500 billion VND (31.25 million dollars) and be profitable for the last three years.
The founding shareholders must hold 50 percent of total registered capital of the new bank, and are not permitted to transfer their stakes to an outside one for five years after the bank is established, according to the decision. An institutional shareholder is not allowed to have over 20 percent of the registered capital, while the limit for individuals is 10 percent.
However, a financial institution as a strategic investor could buy up to 40 percent of the new bank's shares and hold even more if the government approves. The strict rules are aimed at surveillancing and wiping out financial institutions being set up for a quick profit, the newspaper quoted a senior central bank official as saying.
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