OCB and Bac A Bank set up remittance companies
OCB and Bac A Bank set up remittance companies
The State Bank of Viet Nam has approved plans by two additional commercial banks, OCB and Bac A Bank, to set up subsidiaries specialising in providing overseas remittance (kieu hoi) services.
After establishing the subsidiaries, Bac A Bank (the North Asia Commercial Joint-Stock Bank) and OCB (the Orient Commercial Bank) will ask the central bank to approve the receipt and payment of foreign currency services.
When Vietnamese residents are sent remittances from abroad, they can choose either to receive it through banks or from overseas remittance (kieu hoi) companies owned by the banks. Le Minh Tam, CEO of Sacombank Overseas Remittance Service Company, told Thoi bao Kinh doanh (Business Times) that at Sacombank, 60 percent of overseas remittances go through the bank, and the remaining through its overseas remittance company.
According to experts, using remittance service companies rather than banks has several advantages, including streamlined policies and regulations encouraging Viet kieu (overseas Vietnamese) to invest in their homeland. The companies also provide simplified remittance transfer service licences issued by the State Bank of Viet Nam.
Customers using remittance services also benefit as they are not subject to income tax on foreign currency transferred from abroad, there is no limit on the amount of money they can transfer, and they can deliver or receive money in the original currency.
In addition, many remittance companies provide a wide network and modern technologies, together with attractive promotional programmes.
Other banks, including VietinBank, BIDV, Agribank, ACB, Sacombank and Dong A Bank have also been running their kiều hối companies for years.
Of them, Dong A Bank and Sacombank are considered to have pioneered the overseas remittance company model. Both banks had overseas remittance divisions in the 2000s and then decided to set up subsidiaries to facilitate their operation.
In 2016, the remittance company of Dong A Bank earned a revenue of US$1.43 billion, up 5 per cent against 2015. Its pre-tax profit increased 17.8 per cent year-on-year, reaching VND15.2 billion ($670,000). Meanwhile, the remittance company under Sacombank recorded revenues of about $1.5 billion.
