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Vietnam insurer to open bank


October 2, 2008

Vietnam insurer to open bank
The Vietnamese government said on Wednesday it had approved a plan by top insurer Bao Viet, 10 percent owned by Europe's biggest bank HSBC Holdings Plc, to open a bank called Bao Viet Bank, reported Reuters.

The decision came nearly two months after the central bank said it would stop licensing new partly private-owned banks pending changes to bank establishment regulations in an effort to tighten credit and control inflation.

Prime Minister Nguyen Tan Dung had approved Bao Viet's proposal to establish Bao Viet Bank with a base capital of 1.5 trillion dong ($90.8 million), according to an announcement from the Government Office.

Dung also asked the central bank to complete the adjustment of the regulations on new bank establishment and resume licensing new banks according to the new rules.

Vietnam, where about 10 percent of its 86.5 million people have bank accounts, has 37 joint stock banks, partly owned by private companies and individuals.

The central bank said it had received more than 20 applications to establish banks, but only two have been licensed and started operation while Vietnam has been tightening its credit growth this year to fight inflation.

The government has also told state-owned corporations to focus on their core businesses instead of spreading investment in various fields from real estate to banking.

In July, state oil monopoly Petrovietnam said it had decided to against contributing funds to establish Hong Viet Bank, following the government's guidance.

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