Lenders licensed for foreign currency loans
Foreign banks and credit institutions will be licensed to lend in foreign currencies to export enterprises, which will provide short-term capital to exporters and manufacturers.
This picture is for illustration purposes only
The licensing comes under Circular No. 31/2016 from the State Bank of Vietnam, issued on November 15 to amend and supplement certain terms of Circular No. 24/2015 issued on December 8, 2015 by the central bank on foreign exchange loan regulations for foreign banks and credit institutions lending to exporters.
Exporters, when taking out such loans, must immediately exchange the full amount from the foreign currency into Vietnam dong via a spot exchange transaction.
The target of Circular No. 31 is to contribute to the economic aims of Decree No. 35, dated May 16, 2016 from the government on supporting and developing enterprises to 2020 as enterprises face many challenges.
The Circular will come into effect on January 1, 2017 and be valid for one year.
Vietnam now has 50 branches of foreign banks, 50 representative offices, 16 foreign non-bank credit financial institutions, and four joint venture banks, according to the SBV
The other 100 per cent foreign-owned banks in Vietnam are HSBC, ANZ, Standard Chartered Bank, Hong Leong Bank, Shinhan Bank and Public Bank Perhad (PBB).
HSBC was the first foreign bank to gain approval from the SBV to set up a wholly foreign-owned bank in Vietnam, in September 2008. Malaysia’s Hong Leong Bank was the first from Southeast Asia to gain approval from the SBV, in December 2008.
Standard Chartered Bank, Shinhan Bank and ANZ all received approval from the SBV in 2009. Malaysia’s Public Bank Perhad (PBB) is the newest foreign bank to gain approval, in March this year.