Foreign banks flock to Vietnam
Foreign banks flock to Vietnam
There are nearly 100 foreign banks and branches and representative offices of foreign banks in Vietnam, according to incomplete statistics.
With Vietnam’s integration into the ASEAN Economic Community (AEC) this year, many corporations and big banks of ASEAN countries are expected to follow Thai investors to enter Vietnam, not only in the field of production and sales, but also financial markets.
Some commercial banks in ASEAN countries are planning to enhance their presence in Vietnam. Recently, Kasikorn Bank of Thailand set up two representative offices in Hanoi and Ho Chi Minh City. Earlier, Singapore Development Bank (DBS) and Maybank (Malaysia) also came to Vietnam.
Kasikorn said that it would expand operations in Vietnam, and continue to open more offices and branches after being licenced by the State Bank of Vietnam. The bank plans to conquer small and medium enterprises (SMEs) of Vietnam. Before the official launch in early March, Kasikorn had cooperated with two big banks of Vietnam - Vietinbank and Agribank.
Most recently, on March 23, the State Bank of Vietnam approved the establishment of 100% foreign owned bank of Public Bank Berhad (PBB) in Vietnam. The central bank agreed in principle to transfer all the capital contributed by the Bank of Investment and Development of Vietnam (BIDV) in the VID Public JV Bank to PBB.
On July 15, 2014, BIDV and PBB signed a contract on the transfer of BIDV’s capital at VID Public (50%) to PBB under the approval of the central bank. At that time, VID Public had charter capital of $62.5 million.
The representative of a foreign investment fund in Vietnam said when the AEC is formed and a series of free trade agreements (FTA) are signed between Vietnam and other countries, the FDI flow into Vietnam will be stronger.
Currently, many foreign corporations are coming to Vietnam. However, with these potential clients, domestic banks do not have much chance, because usually wherever the FDI flows, the banks of that country will follow.
The expansion of foreign banks in Vietnam seems to be normal business, especially after Vietnam joined the WTO and opened its doors.
However, domestic banks should be careful because with their extensive network of operations, banks from countries in the region in Vietnam will not only serve clients from their home countries but also seek customers in many other countries who intended to invest in Vietnam. For example, the Bangkok Bank in Vietnam will compete to attract customers from China, Malaysia and other countries.
By the end of this year, the AEC will be formally established and one of its objectives is practicing an open banking system, which means that the member states will have to remove all limits on foreign ownership with domestic banks.
The entry of foreign banks also means that there will be a fierce competition with the group of local banks. In addition to serving the financial needs for investment activities of foreign companies, foreign banks also have the ability to attract local customers based on their reputation as well as abundant financial strength from parent companies.
