Banking Sector:
Vietnam's banking system is a multifaceted structure
including banks, non-bank credit institutions, micro financial
institutions, people's credit funds, foreign banks, and
representative offices of banks. Notably, certain banks in Vietnam
have set limits on maximum foreign ownership, reflecting the
nation's commitment to controlling its financial institutions.
This is particularly emphasized in international agreements such as
the EVFTA, where Vietnam pledges to enhance its banking
services.
Despite facing significant challenges in capital raising and risk
management improvement, Vietnamese banks remain open to foreign
investment, with foreign ownership reaching up to 30%.
Additionally, EU investors can participate in two joint-stock
commercial banks with ownership stakes of up to 49%, fostering
competition.
The role of State banks in Vietnam's commercial banking
operations involves implementing safeguard mechanisms through
various measures and tools. This regulatory approach aims to
maintain stability and security within the banking sector.
The digital transformation of banks in Vietnam has brought both
opportunities and risks. While digitalization enhances operational
efficiency, it also poses cybersecurity and information safety
concerns. Recognizing these risks, the Vietnamese government issued
the Law on Cybersecurity 2018 and Resolution No. 100/NQ-CP, and the
State Bank of Vietnam issued Circular to bolster cybersecurity
measures.
Insurance Sector:
Vietnam's insurance market has experienced substantial
growth from 2016 to 2021, presenting enticing opportunities for
European investors. The opportunities is that investors could hold
the majority shares and have major influences in companies.
Moreover, the Draft revised Law on Insurance Business permits
subsidiary companies to invest in Vietnam, even if they may not
satisfy the regulatory requirements.
The country is actively promoting digital transformation in the
insurance sector, with the Ministry of Planning and Investment
launching a program to support this initiative from 2021 to 2025.
However, as with banking, the insurance industry faces cyber
threats, prompting the Ministry of Public Security to draft a
Decree on Penalties for Administrative Violations in
Cybersecurity.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
