Woori Bank launched a ceremony to officially set up its wholly foreign-owned bank in Vietnam. (Source: Woori Bank) Hanoi, (VNA) – Success of foreign banks in Vietnam has been fueling the volumeof capital poured into the sector, while these banks are changing theiroperations to grow.
A foreigndirect investment (FDI) wave emerged in the banking sector in 2006 – 2007 whenVietnam became a member of the World Trade Organization. It turned into a boomin 2009, as the country began to allow the establishment offully-foreign-funded banks.
Betweenthen and now, Vietnam has so far recorded the operation of 50 foreign creditinstitutions, including nine wholly foreign owned banks and hundreds of foreignbanks’ branches and representative offices. In 2016 and 2017 alone, four foreignbanks were licensed to operate in the country.
ANZ, HongLeong, HSBC, ShinHan, Standard Chartered, CIMB, Public Bank Berhad, Woori Bankand United Overseas Bank Limited have all opened wholly foreign-owned banks inVietnam.
As of May2018, the total assets of foreign banks and joint ventures between Vietnameseand foreign banks surpassed 1 quadrillion VND (43 billion USD), with their capitaladequacy ratio (CAR) being at 27.36 percent.
It isnoteworthy that the flow of foreign capital into the sector has seen an emergingof investors from East Asia and ASEAN.
Malaysia’sPublic Bank Vietnam Ltd in July this year received the State Bank of Vietnam(SBV)’s approval to open three new branches and two new transaction offices inHanoi, Ho Chi Minh City and Da Nang to raise its total network in Vietnam to 18outlets.
The SBValso allowed the Republic of Korea’s Woori Bank Vietnam Ltd to establishbranches and a transition office. SBV Governor Le Minh Hung gave the bank thego-ahead to establish branches in the provinces of Thai Nguyen, Ha Nam, HaiPhong, Dong Nai and Binh Duong, and a transaction office in HCM City.
Inmid-May, another Korean bank - Shinhan Bank Vietnam - also established fouradditional branches and transaction offices in Hanoi and HCM City, raising itstotal to 30 nationwide. The expansion has helped Shinhan Bank Vietnam retainits position as the foreign bank with the largest transaction network inVietnam.
In thepast, FDI banks aimed at serving foreign businesses in Vietnam. Now many ofthem are expanding their retail markets, targeting domestic customers. Thismeans a fierce competition with their domestic peers, which is said to benefitcustomers and force domestic banks to improve themselves.
Seo JaeSeok, a representative from the Woori Bank Vietnam, said the Vietnamese bankingsector has been growing strongly. He expected the local Government’s bankingrestructuring efforts to offer more opportunities for foreign investors,particularly their engagements in mergers and acquisitions (M&A) deals.
Accordingto the research and financial service group Fitch Solutions, foreign investorsno longer chose to set up joint ventures with Vietnamese banks. Instead, theywant to expand via 100-percent foreign-funded firms.
Pham HongHai, General Director of HSBC Vietnam – the first wholly foreign owned bank inthe country, said foreign investors will now focus their money on the marketsof their strengths with scales and growth rate suitable to targets set by theparent companies.
Accordingto Hai, their attention will shift from joining M&A or obtaining stakes indomestic banks to focusing on self-development.-VNA
VNA
