Vietnamese banks face more foreign competition

 

Earlier, the central bank had also licensed the first Malaysian-owned lender, Public Bank, in March and South Korea’s biggest lender by consolidated assets, Woori, to establish fully owned banks in the country last month.

They take the tally of fully foreign-owned banks to eight. The others ae ANZ Vietnam, Hong Leong Vietnam, HSBC Vietnam, Shinhan Vietnam and Standard Chartered Vietnam.

To enter the highly attractive Vietnamese financial market, many foreign investors have also started to buy stakes in domestic banks, particularly those that are state-owned. 

Vietcombank, ACB, Sacombank, OCB and SeABank all have foreign strategic shareholders. On August 29, Vietcombank, Vietnam’s biggest commercial bank, signed a memorandum of understanding to sell a 7.7-per-cent stake, equalling 305.8 million shares, to GIC of Singapore. 

Earlier the bank had sold a 15-per-cent stake to Japan’s Mizuho Corporate Bank.

Also in August the International Finance Corporation, an arm of the World Bank, became a shareholder of Tien Phong Commercial Joint Stock Bank (TPBank) after acquiring a 5-per-cent stake for 403.1 billion dong.

Foreign investors see high growth potential in emerging markets like Vietnam, estimating it to be two to two-and-a-half times higher than their GDP growth rate. The Vietnamese banking market is expected to grow by about 15 per cent over the next 10 years. 

Demand for financial and banking services, especially credit cards, will rise in this new emerging market.

Realising these trends, Vietnamese credit institutions have spared no effort to drastically restructure their operations and strengthen their financial, administrative and human resource capabilities.

According to a survey by the central bank’s Monetary Statistics and Forecasting Department in July, many commercial banks were upbeat that credit growth would touch at levels that close to the quotas they had been given by the SBV for the entire year. The 

SBV had set a goal of 18-20 per cent.

They expected lending interest rates to decline slightly and bad debts to be settled significantly by year-end.

Banks are expected to rebound following the restructuring process, making the time right for foreign investors to enter the market.

Meanwhile, many domestic lenders have sought ways to expand into other countries in the region.

Earlier this month the Saigon-Hanoi Joint Stock Commercial Bank (SHB) opened a wholly owned subsidiary in the Cambodian capital Phnom Penh. SHB Cambodia Bank has charter capital of US$50 million (Bt1.7 billion) and is the second subsidiary of SHB in Indochina after the first in Laos.

In July, BIDV received a licence to open a branch in Myanmar. The Yangon branch, which has capital of $85 million, is the outcome of the Vietnam-Myanmar Joint Statement on cooperation in 12 priority areas including finance and banking. Vietnam has 10 banks operating in Laos and Cambodia, with the others including Sacombank, Agribank and MB.

Vietnamese banks also have a presence in many other countries.

BIDV has a representative office in Russia, Vietcombank has a representative office in Singapore and a subsidiary in Hong Kong. VietinBank has branches in Germany, France, Singapore and Myanmar.