Vietnam said on Thursday it will limit or possibly stop issuing new licenses for foreign banks to set up in the country as it looks to encourage takeovers of weaker local lenders and strengthen the financial system.
"Soon, Vietnam will strictly limit, or may stop issuing new licenses for 100-percent foreign owned banks in the country," Deputy Prime Minister Vuong Dinh Hue said in a statement posted on the government website. The move is expected to boost merger and acquisition activity in the sector, with the goal of turning smaller financial institutions into larger ones, according to the statement.
Hue said foreign investors will still be allowed to buy stakes in or own weak local lenders, and added that the government will sell or forcibly transfer the fragile banks that it has bought.
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