During his five-day visit to Japan, Prime Minister Nguyen Xuan Phuc recommended Japan’s Senshu Ikeda Bank acquire an ailing Vietnamese bank with a reasonable bad debt rate to hasten its plans to expand to the country.
He made the proposal at a meeting on June 7 with more than 30 executives of Japanese companies in the Kansai region, including Daikin, Sakura, Acecook, Kubota, Takako, Asahi, Azusa Sekkei, and Fuji Impulse. He pledged to create favorable conditions for such a transaction.
In response to the proposal, Chairman of Senshu Ikeda Bank Mr. Hirohisa Fujita said it aims to open a representative office in Vietnam initially to support Japanese enterprises and will consider opening a branch.
Vietnam is attempting to restructure its banking system, where actual bad debts account for 10 per cent of total credit. The government acquired three ailing banks in 2015 - VNCB, GP Bank and Ocean Bank - at zero cost, to prevent the system from collapsing.
This is not the first time the Prime Minister has stated Vietnam’s openness to selling under-performing banks. Earlier this year he said in a foreign media interview that “if there are any foreign investors interested in buying any of Vietnam’s ailing banks, we will sell them entirely.”
Other commercial banks are eager to receive support from overseas. During a May 3 meeting, Deputy Prime Minister Vuong Dinh Hue expressed a hope that Japanese lender the Sumitomo Mitsui Banking Corporation (SMBC) would participate in Eximbank’s restructuring process as well as the equitization and restructuring of State-owned enterprises (SOEs).
Meanwhile, a recent Politburo approval affirmed that the State will continue to hold a controlling stake of no less than 65 per cent in Agribank, BIDV, VietinBank, and Vietcombank.
Favorable conditions for Japanese firms
At the meeting, Chairman of Takashimaya Co., Mr. Shigeru Kimoto, expressed an interest in building an underground shopping mall in the heart of Ho Chi Minh City in anticipation of the opening of its urban railway line.
Other Japanese corporations have asked the Vietnamese Government to upgrade infrastructure, further develop support industries, and minimize foreign exchange risks.
Prime Minister Phuc suggested businesses from Kansai invest in key infrastructure projects, particularly those in the public-private partnership (PPP) mode, and others in the environment and water resources treatment, renewable energy, banking and finance, and, especially, SOE equitization.
He repeated a commitment to creating the most favorable conditions for Japanese enterprises to conduct long-term business in the country.
