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First Foreign Takeover of Vietnam Bank

United Overseas Bank (UOB), the Singapore-based behemoth, is near to closing a deal that would make it the first foreign buyers to own a local bank in Vietnam. The deal is still pending the approval of the Vietnamese government, but as of January of this year a Decree was issued that would give the prime minister of Vietnam the power to agree to a bank takeover by a foreign institution. The transaction is set to be “negligible” in terms of monetary value, but major in terms of regional value for the bank.

United Overseas Bank (UOB)

GP Bank is an ailing Vietnamese credit institution that is operating on bad debt higher than their charter capital. The bad debt was spawned from the local real estate boom in the late 2000s, whereas banks lowered standards that allowed property developers to get easy loans which ultimately blew up. Currently around nine banks are in trouble, and the Vietnamese government is looking for new ways to solve the ongoing issue. The UOB deal would be the first of its kind, and probably not the last.

For more on this story, check out either Viet Nam News and/or Nikkei Asian Review.