Forming a Transparent Finance – Banking System and Coming Closer to the Stock Market

"The link" of Banking – Goverment – Stock Market. Left to right: Mr. Dang Van Thanh (Chairman of Sacombank); Mr. Vu Bang (Chairman of SSC); Mr. Nguyen Huu Tin (Vice Chairman of HCMC People Committee); Mr. Tran Ngoc Minh (Director of SBV-HCM branch) and Mr. Tran Dac Sinh (Director of HSTC). (Photo: T.C)

The listing of the Sai Gon Thuong Tin Commercial Bank (Sacombank) marked an important milestone not only for this bank but also for the whole banking system of Viet Nam.

When the country is in the process of dramatic transformation and development, the banking industry is always the leader in growth and diversifying services.

However, in order to attract investment, the openness and transparency are always top priorities and taking commercial banks onto the bourse is considered as an indispensable move. Once listed, banks stocks also bring along a new face for the stock market in particular, and for the whole economy, in general.

Impact on the banking system

Under the pressure of competition from other banks and the investing needs of the public, the listing of Sacombank will be definitely followed by the listing of other commercial banks. This will pressure the regulators, the State Bank of Viet Nam (SBV), to have a new regulation and management that can match the reality of the finance – banking system: link it to the capital market.

As the need for development growing, SBV should also have appropriate reform policies to improve the current banking system in every aspect. However the most urgent matter now is the transparency and open-up in finance information.

After joint-stock commercial banks, SBV is currently study the regulation which demands state-own commercial banks to open up their financial information in compliance with the listing requirements. Therefore, whether they like it or not, state-own banks will soon be transparent under the public eye and will be wholly responsible for their own economic efficiency.

The finance – banking system would come close to the transparency and openness. (Photo: T.C)

Moreover the listing of Sacombank can serve as the role-model for the equitization and listing of such large banking networks as Vietcombank or BIDV. Is an independent, open and transparent finance – banking system coming into being?

When Viet Nam is trying its best to reform and integrate into the global economy, the financial market will see great changes. The competition is much tougher once large international financial institutions enter the domestic market. The effort from the government won’t be sufficient and effective if there is no willingness and participation from domestic institutions.

Listing is useful for brand promotion and building trust with customers. There are also many listing incentives for these institutions to improve their competitiveness and better themselves under the monitor of the investing public; and to attract the attention as well as the support of large international financial organizations.

All is to prepare for a big playground: the global playground.

Vietnamese stock market – catching up to “region level”

Since the beginning of the year, the stock market has always suffered from the imbalances between supply and demand. Many warning bells have been tolled by experts to calm investors down in this brain-teasing game. However, the most fundamental solution still is to develop the supply side, and help the market finds its balance, which is much better than demand-suppressing solutions.

The listing of such “giants” as Sacombank now will play an important role in stabilizing the supply and demand.

Vietnamese stock market will develop more steadily and durably with "listing giants". (Photo: T.C)

It not only serves as an encouragement for many other commercial banks but also opens the door for many large companies in other industries to find their places on the listed market.

This enormous supply can meet the investors demand. The stock market, therefore, will develop more steadily and in a stable manner.

In many recent meetings, several large international investment organizations have showed their attention to the Viet Nam’s stock market, especially to big domestic enterprises which operate in promising businesses.

Hence, with the listing of big enterprises, the market will repair its weak point in the foreign investors’ eyes: the capital size and liquidity.

In turn, the listing will attract an enormous amount of investment currently waiting to be poured into the market - the wave of foreign indirect investment (FII) in international market.

Now that Viet Nam comes closer than ever to WTO accession and the stock market celebrates its 6th birthday, the listing of a commercial bank is a memorable and meaningful event. As for Sacombank, the listing will bring huge benefit to shareholders and to its own. This event opens a new page in the history of Sacombank and paves the way for other banks, gradually increases the openness and transparency of the whole banking system.

This will partly increase the size and attractiveness of the Vietnamese stock market and confirm the reform and international integration policy of Viet Nam.

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By Tuong Chau

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