The increasing penetration of foreign banks in line with the roadmap for openness following free trade agreements signed has been posing a number of challenges for domestic ones, namely the amounting pressure of competition in the sector, the possibility that domestic banks will gradually lose important segments of the market, being acquired and controlled by foreign ones. | Policy of Openness for Foreign Banks in Vietnam Nguyen Chien Thang1 1 Vietnam Institute of Economics, Viet Nam Academy of Social Sciences. Email: ncthang69@ Received: 8 June 2017. Accepted: 9 August 2017. Abstract: Since Vietnam joined the World Trade Organisation (WTO), the country has been implementing an extensive open door policy in the banking sector, allowing 100% foreign-owned banks to be established in Vietnam and encouraging domestic banks to seek foreign strategic investors to raise the capital, improve the technologies and better the risk management. The process has gained positive results, with the rapid increases in the number of 100% foreign-owned and joint-venture banks, and the increasing international competition and cooperation among the banks in the country. However, the increasing penetration of foreign banks in line with the roadmap for openness following free trade agreements signed has been posing a number of challenges for domestic ones, namely the amounting pressure of competition in the sector, the possibility that domestic banks will gradually lose important segments of the market, being acquired and controlled by foreign ones. Keywords: Banks, policy of openness, Vietnam. Subject classification: Economics 1. Introduction Vietnam began its implementation of the openness of banking system in 1990 with the establishment of the first joint-venture bank - the Indovina Bank (a joint venture between the Cathay United Bank of Chinese Taipei and Vietnam joint stock commercial Bank for Industry and Trade Vietinbank). In 1992, the first branch of a foreign bank was permitted to be established in Vietnam, which is the branch 28 of the ANZ from Australia. From this, the policy for foreign banks has been more and more open in line with the extensive integration progress of Vietnam into the international economy. The policy of openness in the banking sector can be divided into two stages: one before the WTO accession and one since the .
