Banking and Insurance Landscape in Vietnam: Opportunities and Challenges

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.
Please do not hesitate to contact Dr. Oliver Massmann at if you have any questions. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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