Foreign CEOs cannot reap fruits in Vietnam
Foreign CEOs cannot reap fruits in Vietnam
Vietnam turns out to be not a good land for many bank foreign CEOs. Many of them have to leave after a short time in Vietnam, ceding their positions to Vietnamese.
When taking his office as the CEO of Techcombank one year ago, Simon Morris stated that his goal was making Techcombank turn into the leading bank in Vietnam by 2014.
However, the CEO has to say goodbye to Techcombank, though the goal has not been obtained yet.
Morris became Techcombank’s CEO in January 2012, starting the trend among Vietnamese banks of hiring foreign CEOs.
Maritime Bank then invited Atul Malik, who spent many years working for Deutsche Bank and Citibank, to hold the post of CEO. The Mekong Development Bank also got a foreign CEO – Tay Han Chong.
The foreign CEOs, believed to have high professionalism and international experiences, were expected to make breakthroughs for the Vietnamese banks, which then faced a lot of big challenges, from the credit growth tightening and the banking system restructuring.
Bui Kien Thanh, a banking expert, noted that hiring foreign CEO is inevitable for Vietnamese banks, which enter the global integration period and need international experiences.
“However, hiring foreign CEOs is just the first step in the banks’ plan to renovate themselves. The time will tell if banks can change their fates with the foreign CEOs,” he commented.
The time has given the answer. The three commercial banks managed by foreign CEOs reported unsatisfactory business results last year.
In 2012, the pretax profit of Techcombank was VND1.018 trillion, just fulfilling 22 percent of the plan, a sharp decrease of 76 percent from the previous year 2011.
The pretax profit of Martime Bank in 2012 dropped by 70 percent from the year before. The 70.6 percent reduction has been reported by the Mekong Development Bank for 2012.
2012 was a difficult year for all, including commercial banks, and it is understandable why banks had an unsatisfactory business year. However, analysts have commented that the sharp decrease of 70 percent in profit is “unacceptable.”
Other banks, though having unsatisfactory business results, did not see such a bad result. A report of StoxPlux, a finance service firm, said the profit of 33 Vietnamese banks in 2012 decreased by 27.3 percent on average.
It is really questionable why the professionalism and the experiences of the worldly wise foreign CEOs, who succeeded in many other markets, could not succeed in Vietnam.
According to Nguyen Duc Huong, Vice President of Lien Viet Post Bank, foreign CEOs are very professional, but this would not have much significance if they have unprofessional staff.
Huong also said that it always takes foreigners a lot of time to get adapted to the Vietnamese business culture. This seems to be the most reasonable explanation for the failure of the foreign CEOs in Vietnam.
Huong declined to make detailed comments. However, the so called “Vietnamese business culture” includes a lot of factors. In most Vietnamese enterprises, important issues must be decided by the Board of Directors, while the members of the board of management, including CEO, are just the implementers. Especially, it is very difficult for foreign CEOs to learn about the inner operation and the ins and outs of banks’ affairs.
vietnamnet
