Will ‘zero dong’ banks turn into 100 percent foreign owned banks?

The Capital Market Working Group has suggested lifting the foreign ownership ratio limit in banks in which the state is a big shareholder, and in privately run joint stock banks to 35 percent. As for ‘zero dong’ banks, the ceiling should be up to 100 percent.

Vietnamese Prime Minister Nguyen Xuan Phuc at the 2016 Vietnam Development Forum (VDF) said that ADB and a private Vietnamese partner are considering buying a ‘zero dong’ bank, and they will introduce other partners to help Vietnam deal with weak banks.

‘Zero dong’ banks are weak banks which have been taken over by the State Bank at zero dong and forced to undergo compulsory restructuring.

Nguyen Duc Kien, deputy chair of NA’s Economics Committee, said on Dan Viet that the PM’s message is clear that Vietnam may sell zero-dong banks to foreign partners to turn them into wholly foreign owned banks.

Vietnam, instead of seeking foreign strategic investors to buy a 30 percent maximum stake under the law, would sell the entire banks to turn them into 100 percent foreign owned banks.

This is considered a good solution and will not violate the laws on credit institutions, because the law allows 100 percent foreign owned banks to operate in Vietnam.

In 2015, the State Bank bought 3 weak banks at zero dong, namely Ocean Bank, VNCB and GP Bank. After the transfer, the business performance of the three banks has been improved. The solution has been praised as a perfect move which allows to avoid the adverse influences to other banks in the system, while depositors’ rights can be protected.


Kien said that Phuc’s message to international investors shows the government’s strong determination to settle bad debts and make credit institutions healthier.

VNCB, which was named a Trust Bank in the past, in 2012 was listed among nine weak banks put under the State Bank’s special control.

The bank’s accumulative loss by that time had reached VND8.765 trillion and the stockholder equity minus VND5.711 trillion.

The figures had reached VND11.348 trillion and minus VND8.293 trillion, respectively, by the end of 2013.

As for Ocean Bank, the bad debt of the bank had reached VND15 trillion by March 31, 2014, or 49.84 percent of its outstanding loans, while it had incurred a loss of VND10.2 trillion, or 249.63 percent of stockholder equity.

GP Bank had reported accumulative loss of VND12.28 trillion by April 2, 2015, while its bad debt ratio had reached a record high of 45.37 percent.

It is still unclear which bank ADB is eyeing.

Nam Lich / vietnamnet