More banks look set to open in Laos
More banks look set to open in Laos
Many banks may open their doors in Laos this year after the Bank of the Lao PDR (BOL) temporarily ceased issuing licences for the establishment of private banks in mid-2014.
“We will start consideration of documents and examine the submitted proposals from investors this month,” BOL Deputy Governor, Mr Sonexay Sithphaxay said.
BOL recently ceased issuing licences because it wanted to check the existing banks to see if they are up to standard for both quality of service and management.
“New banks must be better quality and meet the required standards to ensure international market integration,” Mr Sonexay said last week.
“Based on the new regulations on the establishment of banks, all new banks must not be individual investments.”
“This means that new banks must have shareholders locally or from overseas.”
“The shareholders must also be a bank that has good background in service operation.”
“And it must also have estate that is valuable and believable.”
Regarding the figures on how much the shareholders should hold or how much estate or assets they should possess, they have yet to be revealed because they are waiting for approval or announcement from the BOL.
This meant that in the past the private sector could establish a bank in Laos even though it did not have a parent bank to support it or back it up.
During the period of temporary cessation of issuing licences, since mid-2014 and last year, “There have been many bank investors to submit proposals to BOL and requesting to open banks in Laos,” Mr Sonexay said.
“They are both local and overseas investors. The foreigners are from both Asean and other continents.”
So far the total number of banks has increased to about 40, including state-owned banks, specialised banks, joint-venture banks, private banks, subsidiary banks and foreign branch banks.
The temporary cessation of issuing licences is aimed to ensure that the banking services here relate to the region and global integration and to make sure they are of the correct quality and standard.
Currently BOL is urging banks in Laos to upgrade their service systems and management to guarantee their quality meets international standards. The improvements include the use of accepted international systems.
BOL has closely supervised commercial banks, non-bank institutions and the stock market, which has resulted in a safe and sound financial system.
The improvements included the use of an international system, Basel II, w hich some of the banks in Laos are now conducting a study on, such as ACLEDA Bank Lao Ltd.
Basel II is intended to create an international sta ndard for banking regulators to control how much capital banks need to put aside to guard against the types of financial and operational risks banks (and the whole economy) can fa ce.
BOL continuously applied the CAMELS and Basel I principles to supervise commercial banks and prepared to reform the existing commercial banks' supervision systems toward banking supervision under the Basel II principle.
