Foreign banks get fairer deal

Foreign banks do not enjoy the same rates as US banks do under the BTA

The decision said that from October 1, foreign bank branches (excluding US banks) would be able to mobilise local currency from individuals and legal organisations which do not have credit relations with the bank not higher than 50 per cent of the bank’s registered capital when it was first established.
“I think that this decision suits what foreign banks required from the State Bank,” State Bank’s foreign bank division director Dao Viet Minh said.
“[Foreign banks] will benefit from that rate, especially banks operating in retail banking, enabling them to attract more capital and expand their activities in Vietnam.
“I also know that it is still a low rate compared with that of US banks in Vietnam, but one thing is sure: that when Vietnam’s economy opens further following integration, this rate will become higher than it is now,” Minh said.
Under the Vietnam-US Bilateral Trade Agreement (BTA) signed in 2001, US banks have their own roadmap to raise rates for mobilising local currency. By 2010, they will be able to operate with no restrictions, along with all local banks. But banks from other countries do not have the same flexibility.
For this reason, foreign banks have said they face discrimination, and asked the Vietnamese government to treat them equally with US banks.
Now, although their rate of mobilisation for local currency has been raised to 50 per cent, it is only a quarter of the rate allowed to US banks, and there is no future plan in place to raise the rate later.
Earlier this year, the central bank’s governor Le Duc Thuy said the State Bank was waiting to make bilateral trade agreements with countries other than the US before making decisions to raise mobilisation rates.