Foreign banks see opportunities in Vietnam

15:35 | 15/04/2015 Economy

(VEN) - Foreign banks have increased their presence in Vietnam in recent years, underlining the fact that the Vietnamese financial market remains attractive in the eyes of foreign investors.

Foreign banks see  opportunities in Vietnam

Vietnam currently has more than 50 representative offices and 50 branches of foreign banks, five foreign-invested banks and some joint-venture banks.

The State Bank of Vietnam (SBV) issued a document to allow Malaysia’s Public Bank Berhad (PBB) establishing a foreign-invested bank in Vietnam on March 24. This is the sixth foreign-invested bank operating in Vietnam after the Hong Kong and Shanghai Banking Corporation (HSBC), the Australia and New Zealand Banking Group Limited (ANZ), Standard Chartered Bank Limited, Shinhan Vietnam and Hong Leong Bank. The Kasikorn, one of the leading banks in Thailand has also opened two representative offices in Hanoi and Ho Chi Minh City after a long time of cooperation with the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) and the Vietnam Bank for Agriculture and Rural Development (Agribank). According to Kasikorn General Director Preedee Dawchai, the official presence in Vietnam would help the bank increase flexibility in business management.

The prospects of the Vietnamese economy will be bright thanks to great opportunities from the AEC and the signing of free trade agreements such as the EU-Vietnam Free Trade Agreement (EVFTA) and the Trans-Pacific Partnership (TPP) Agreement, creating an engine for foreign banks to increase investment capital and stay for a long time in Vietnam.

Japan, the Republic of Korea, China and Chinese-Taipei have had a large amount of investment capital in Vietnam in previous years. Therefore, the majority of foreign banks are come from these countries and territories. However, this trend has moved to ASEAN countries which are promoting investment in Vietnam. It means that regional credit institutions are ready for opportunities offered by the ASEAN Economic Community (AEC) as the AEC aims at integrating the intra banking sector by 2020 in order to create the open system for fair operations between member countries.

The increasing presence of foreign banks in Vietnam will provide a large amount of investment capital but will also cause increased competition.

State-owned banks have primarily focused on large-sized corporations and state-owned enterprises, while joint stock banks have paid their attention to small and medium-sized enterprises and inpidual customers. However, the market seems to have fierce competition as foreign direct investment (FDI) businesses are holding nearly 70 percent of the country’s export turnover and these potential customers are in the hands of foreign banks. Moreover, foreign banks are also targeting domestic enterprises.

Under the banking system restructuring project, the SBV has set a target towards building one or two banks at a higher level. Therefore, domestic banks must have strategic plans to persify services and implement merger and acquisitions (M&A) deals to expand operations.


By Thanh Thanh