Banks plan to explore mergers or acquisition of financialinstitutions, as well as the establishment of new financial companies,to ensure a healthier bottom line by offering more consumer loans.
Atrecent shareholders meetings, at least three banks, Saigon–HanoiCommercial Joint Stock Bank (SHB), Maritime Bank and Vietcombank, haveasked shareholders to support plans to acquire or set up financialcompanies.
At its shareholders meeting last month, SHB's boardof directors sought approval to merge with and restructure a financialcompany that would become the bank's affiliate and provide consumerloans.
Bank directors said such a move would add value to SHB's operations.
TheMaritime Bank has also asked its shareholders to authorise theestablishment or acquisition of a financial company that wouldspecialise in developing consumer loans.
Similarly, Vietcombank has asked its shareholders to approve a plan to set up a consumer credit company.
NghiemXuan Thanh, general director of Vietcombank, said the retail bankingmarket had much room to grow, but wholesale banking was not expected todevelop as once predicted.
As most consumer loans are a small amount, they help banks disperse risks, he said.
Late last year, HDBank acquired Societe Generale Viet Finance (SGVF) and renamed it HDFinance.
NguyenHuu Dang, general director of HDBank, said before purchasing thefinancial company, consumer lending had not been effective for the bankbecause of high costs.
Consumer loans are generally small, but they must also comply with the strict loan approval process at the bank.
After HDBank acquires a financial company, small loans below 30 million VND (1,420 USD) are then transferred to HDFinance.
HDFinance,which has modern management technology, can approve the loan in 30minutes to an hour, which is much faster than the time needed for bankapproval.
Banks prefer to restructure existing financialcompanies instead of establishing new ones as these companies havemarket experience, and, thus, risks are lower, Dang said.
According to economist Nguyen Tri Hieu, capital mobilisation at bankshas been good, but they have faced difficulties in lending.
As aresult, they need to focus more on personal loans, either throughacquisition or establishment of financial companies or consumer creditcompanies.
Because financial companies are not required to complywith strict regulations, they can do business more easily than banks,which find it hard to thrive in the consumer loan market.
In addition, the income of Vietnamese loan applicants is sometimes hard to prove, as required by bank rules.
Thebanks' establishment of finance companies can help bring greaterprofits because of the higher interest rates on consumer loans, he said.
Although they pay a higher interest rate, borrowers of theseloans do not have to deal with complicated procedures or providecollateral.-VNA
Atrecent shareholders meetings, at least three banks, Saigon–HanoiCommercial Joint Stock Bank (SHB), Maritime Bank and Vietcombank, haveasked shareholders to support plans to acquire or set up financialcompanies.
At its shareholders meeting last month, SHB's boardof directors sought approval to merge with and restructure a financialcompany that would become the bank's affiliate and provide consumerloans.
Bank directors said such a move would add value to SHB's operations.
TheMaritime Bank has also asked its shareholders to authorise theestablishment or acquisition of a financial company that wouldspecialise in developing consumer loans.
Similarly, Vietcombank has asked its shareholders to approve a plan to set up a consumer credit company.
NghiemXuan Thanh, general director of Vietcombank, said the retail bankingmarket had much room to grow, but wholesale banking was not expected todevelop as once predicted.
As most consumer loans are a small amount, they help banks disperse risks, he said.
Late last year, HDBank acquired Societe Generale Viet Finance (SGVF) and renamed it HDFinance.
NguyenHuu Dang, general director of HDBank, said before purchasing thefinancial company, consumer lending had not been effective for the bankbecause of high costs.
Consumer loans are generally small, but they must also comply with the strict loan approval process at the bank.
After HDBank acquires a financial company, small loans below 30 million VND (1,420 USD) are then transferred to HDFinance.
HDFinance,which has modern management technology, can approve the loan in 30minutes to an hour, which is much faster than the time needed for bankapproval.
Banks prefer to restructure existing financialcompanies instead of establishing new ones as these companies havemarket experience, and, thus, risks are lower, Dang said.
According to economist Nguyen Tri Hieu, capital mobilisation at bankshas been good, but they have faced difficulties in lending.
As aresult, they need to focus more on personal loans, either throughacquisition or establishment of financial companies or consumer creditcompanies.
Because financial companies are not required to complywith strict regulations, they can do business more easily than banks,which find it hard to thrive in the consumer loan market.
In addition, the income of Vietnamese loan applicants is sometimes hard to prove, as required by bank rules.
Thebanks' establishment of finance companies can help bring greaterprofits because of the higher interest rates on consumer loans, he said.
Although they pay a higher interest rate, borrowers of theseloans do not have to deal with complicated procedures or providecollateral.-VNA
