Dr. Can Van Luc from the Bank for Investment and Development of Vietnam (BIDV) believes that many new banks will join the Vietnamese market by the end of 2015 or early 2016.

Vietnam, a member of AEC, will have to accept foreign ownership ratio of up to 70 percent in Vietnamese banks, much higher than the ceiling foreign ownership ratio of 30 percent applied to bankers from other regions.

The foreign ownership ratio will be a maximum of 49 percent in insurance and securities companies.

“This is why I strongly believe that more foreign banks will come to Vietnam in 2016,” Luc said.

The Vietnamese finance & banking market received one more foreign member when Public Bank Berhard (PBB) from Malaysia, a joint venture bank with BIDV, shifted to become a 100 percent foreign owned bank.

The PBB’s decision has raised the number of operational foreign banks in Vietnam to six. There are also 43 foreign bank branches and 49 foreign bank representative offices now operational in Vietnam.

Infornet quoted Ms. Nguyen Thuy Duong, Partner of Ernst & Young Vietnam (EY Vietnam) as saying that number of foreign banks in Vietnam will be increasing after AEC is established by the end of the year.

“Foreign bankers are eyeing the Vietnamese market and they are just awaiting the official admission tickets,” she said.

An analyst noted that South Korean and Indian banks are attempting to penetrate the Vietnamese market.

According to Luc, the 70 percent foreign ownership ratio principle will be valid as soon as AEC forms. However, with the ASEAN Minus X principle, some less developed economies would follow specific integration process, which means that Vietnam may not have to accept the maximum 70 percent foreign ownership immediately.

This means that Vietnam can open its banks step by step, by 40 percent, 50 percent or 60 percent, depending on the government’s negotiations.

In fact, many foreign bankers have been trying to “take a shortcut” to Vietnam by buying shares of Vietnamese operational banks. However, no successful deals have been reported recently.

According to Luc, many negotiations failed because the involved parties could not reach agreements on business valuation. This is partially because Vietnam still lacks independent business valuation firms.

Luc also said it was necessary to simplify administrative procedures, emphasizing that complicated procedures will discourage investors, who want to wrap up deals quickly to avoid missing opportunities.