Foreign giants expand business in Vietnam’s finance sector
Considering Vietnam’s finance and banking market lucrative, many financial institutions have enlarged their projects in the country based on their sharpened competitiveness in strategic business areas.
At a recent meeting with Deputy Prime Minister Vuong Dinh Hue, Yoon Jong-kyoo, chairman and CEO of South Korean’s Kookmin Financial Group, said that his group will invest an addition of more than US$110 million to expand its activities in Vietnam as it sees the market a huge potential for growth.
Accordingly, the major Korean group will open its second bank branch in Hanoi after launching its first one in Ho Chi Minh City in 2011. Earlier, Kookmin also enlarged its investment in Vietnam by increasing the capital of its Ho Chi Minh City branch from US$36 million in 2013 to US$70 million now.
Late last year, Kookmin, which has more than 1,130 domestic branches and four overseas ones with over 30 million clients, also spent more than US$30 million to acquire Maritime Bank Securities and renamed it KB Securities Vietnam JSC.
Another Korean bank - Woori Bank – has recently announced to increase charter capital from VND3 trillion (US$12.66 million) to VND4.6 trillion (US$195.4 million), becoming the second largest wholly foreign owned bank in Vietnam just behind HSBC by capital.
This year also saw Bank of China (Hong Kong) Limited received permission of the State Bank of Vietnam (SBV) to increase its charter capital from US$80 million to US$100 million.
The SBV also allowed the Hanoi branch of NongHyup Bank to increase its charter capital from US$35 million to US$80 million in the first half of this year.
Besides the charter capital, foreign banks in Vietnam have been also expanding their transaction networks in a bid to increase market share, especially in the retail banking sector.
Shinhan Bank Vietnam, for example, this year established four additional branches and transaction offices in Hanoi and Ho Chi Minh City, raising its total to 30 nationwide. The expansion has helped Shinhan Bank Vietnam retain its position as the foreign bank with the largest transaction network in Vietnam.
Shinhan Bank has 30 branches and transaction offices in Vietnam
Nine banks - ANZ, Hong Leong, HSBC, Shinhan, Standard Chartered, CIMB, Public Bank Berhad, Woori Bank and United Overseas Bank Limited – have so far opened wholly foreign-owned banks in Vietnam.
Meanwhile, Deputy Prime minister Vuong Dinh Hue has recently affirmed that Vietnam will strictly limit, or may stop issuing news licenses for wholly foreign owned banks in the country.
It will be a big opportunity for the existing foreign-owned banks in Vietnam as the market is proving fruitful for them, who are posting better business results than their local peers (if comparing with banks having the same total assets).
According to the SBV’s latest report, by the end of the third quarter last year, the return on asset (ROA) of foreign and joint venture banks in Vietnam was 0.74 percent, higher than 0.46 percent of state-owned commercial banks and 0.5 percent of joint stock commercial banks.
By the end of last year, the total assets and charter capital of foreign and joint venture banks in the country was VND954.16 trillion and VND109.66 trillion, respectively.
Besides advantages in governance and technologies, foreign banks are also better than domestic peers in terms of capital. While domestic banks are suffering from an urgent capital increase to meet the Basel II standards as required by SBV by 2020, foreign banks are relaxed because their minimum capital adequacy ratio (CAR) reaches up to 29.11 percent, much higher than the 8 percent under Basel II norms. Foreign banks’ CAR ratio is three times higher than that of state-owned banks and 2.5 times higher than that of joint stock banks.
Analysts thus said that Vietnamese banks needed to operate on a larger scale with huge investments in technology and products through consolidations and mergers to create stronger institutions that could compete with foreign banks in the time to come.
- FDI in Vietnam – Where is the Investment Going? (12/08/2019)
- HCM City solicits investment in infrastructure (30/07/2019)
- Vietnam - Japan Business Matching Symposium 2019 (29/07/2019)
- RoK’s rural development group to invest in smart farming in Vietnam (15/07/2019)
- FDI reaches record level in four months (08/07/2019)
- Powering 220 kV Southern Sai Gon - Urban District 8 transmission line (27/06/2019)
- EVFTA Press Release - Official Announcement from the EU (26/06/2019)
- PM calls on Korean investors to expand operations in Vietnam (12/11/2018)
- E-commerce golden pass for logistics (12/11/2018)
- Hoa Phu Industrial Park - The destination of success (12/11/2018)
- Long Thanh airport’s feasibility study approved (12/11/2018)
- Renewable energy projects spur foreign investment surge (02/11/2018)
- New innovation centre to provide grounds for Vietnam 4.0 (02/11/2018)
- National Assembly set to ratify historic trade deal (02/11/2018)
- Overseas financiers outline obstacles (02/11/2018)
- Moody’s upgrades ratings on Vietnamese banks (01/11/2018)
- Foreign investors expand networks in Vietnam (01/11/2018)
- Altus Capital funded to invest in distressed Southeast Asian companies (01/11/2018)
- More FDI to reach southern region (01/11/2018)
- Foreign fashion giants set footprint in Vietnam through M&A (31/10/2018)
- Key infrastructure projects calling for investment in HCMC (08/07/2019)
- Bac Ninh licenses 116 FDI projects in seven months (22/08/2018)
- Binh Phuoc licenses 24 projects worth $1 billion (22/08/2018)
- Hue targets $56mil in investment this year (15/08/2018)
- Hanoi seeks approval for Vingroup’s $300 million IT park (31/07/2018)
- List of Project Calling For Investment in Lam Dong Province in 2018 (31/07/2018)
- Kien Giang calls for investment in 12 resort projects (31/07/2018)
- Decree amendments open paid TV firms to foreign investment (30/07/2018)
- Vietnam: Opportunities in the Waste-to-Energy Sector (24/07/2018)
- Can Tho City seeks investment for 54 projects worth $5.4 billion (20/07/2018)
- Hoa Lac High-tech Park aims for $1 billion investment in 2018 (19/07/2018)
- Large-scale undersea tunnel to be constructed next year (19/07/2018)
- Map of industrial parks in Vietnam (23/07/2019)
- 493 Projects Invested in Nghi Son Economic Zone and Industrial Zones (09/02/2018)
- Thai Binh Strives to Attract Investment Capital of VND 5000 billion in Industrial Parks and Economic Zones (07/02/2018)
- Vinh Phuc Adds 4 New FDI Projects in Industrial Zones (07/02/2018)
- Dung Quat EZ and Quang Ngai IPs Attracted 258 Projects with a Total Investment Capital of More Than US$ 11 Billion (30/01/2018)
- Solutions to attract Investment Capital into Industrial Parks in Bac Giang Province (19/01/2018)
- Nghi Son Economic Zone and Industrial Zones Received 66 new Investment Projects (08/01/2018)