Thailand's Siam Commercial Bank (SCB) will set up a branch in Viet Nam by acquiring the joint venture Vinasiam Bank.

Prime Minister Nguyen Tan Dung approved the move, which had been suggested by the State Bank of Viet Nam (SBV), the government office said in a notice released online on July 10.

"Vinasiam is weak in organisation and operation, and it has failed to ensure adequate charter capital as required by law," the notice said.

SCB is qualified for a licence to open the branch, and its takeover of Vinasiam will help manage a fragile institution in the domestic banking sector, the SBV said.

The establishment of the branch, which will not be a wholly foreign-owned bank, will not add any pressure on the sector and will be in line with government directives, it added.

SCB is a member of the SCB Group, which also runs asset management, securities and life insurance companies.

Vinasiam was established in 1995 in HCM City with the Viet Nam Bank for Agriculture and Rural Development owning a 34 per cent stake. SCB and the Charoen Pokphand Group of Thailand each held 33 per cent of Vinasiam's equity.

This year, the SBV has taken over three commercial banks as part of its efforts to clean up the banking system. The three banks are Viet Nam Construction Bank, Ocean Bank and Global Petrol Bank.

Source: VNS http://www.vir.com.vn