According to Keith Pogson, Ernst & Young’s Asia-Pacific Financial Services Leader, there are several reasons for the investors’ interest in buying Vietnam’s unhealthy banks.

Firstly, in the face of the difficulties of the global economy, a large population together with high GDP growth and increasing average per capita income makes Vietnam an attractive destination.

Secondly, a scattered banking industry with the absence of a leading bank has opened up the opportunity to vie for market leadership.

What is more, potential overseas investors are fully aware of their competitive advantage in techniques, products and technology.

Foreign investors’ tendency to buy Vietnam’s weak banks has been increasing, but it should be accompanied by Vietnam’s reform policies. Otherwise, investors will find the market attractive but full of risk, he is cited as saying.

However, not many investors have bought stakes in local banks. Pogson says they are waiting for likely improvements in the legal framework governing mergers and acquisitions (M&A) and setting foreign ownership ratios which are now at a mere 15 to 20 percent.

Presently, economic difficulties in many countries, especially in Germany, France and Italy, have prevented foreign banks from investing overseas.

Potential investors could be banks of Australia, America, Canada and Asia, he says.

Buying weak banks could not only help them settle their problems but also help foreign banks gain a foothold in the local market. Once regulations on mergers and acquisitions are clearer, overseas investment into the banking market will gather speed.