Foreign banks scale down business in Vietnam

Some large foreign banks operating in Vietnam have recently scaled down their business or withdrawn capital from Vietnamese banks. What is happening with the banking sector?

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VIB Bank has announced it will take over the operation of Commonwealth Bank of Australia (CBA) HCMC branch. 

CBA HCMC branch began its operation in 2008. Two years later, CBA holding bank contributed capital to VIB Bank, holding 15% of charter capital. 

The proportion was later raised to 20%. CBA is now the strategic investor and biggest shareholder at VIB. The bank from Australia has two seats on VIB Bank’s board of directors and one seat on the supervisory board.

Analysts said the move by CBA was taken after nearly 10 years of presence in Vietnam.

Many other large foreign banks have also reduced operations recently.

In mid-June, on its official website, Techcombank released a notice consulting shareholders about a plan to take back 19.41% of Techcombank shares that HSBC has been holding for 12 years.

With the proposed price of VND23,455 per share, the value of the deal is estimated at VND4 trillion.

An analyst said with HSBC’s divestment, Techcombank would have to look for other potential partners to sell the stakes, and this may force the bank to delay the plan to increase its charter capital from VND8.878 trillion to VND14 trillion in 2017.

Two months before, ANZ Vietnam released a notice saying it had sold the entire retail banking division to a foreign partner – Shinhan Vietnam.

The agreement with Shinhan Vietnam includes the transfer of eight branches and transaction points of ANZ Vietnam in Hanoi and HCMC and the staff of the division.

Prior to that, Standard Chartered unexpectedly recalled its two representatives from ACB. At the 2017 ACB shareholders’ meeting held in April, Standard Chartered confirmed that the capital withdrawal process was under discussion.

Under current laws, foreign institutional investors must leave the board of directors at least 18 months before the share transfer day.

Nguyen Tri Hieu, a banking expert, commented that the capital withdrawal of a series of foreign banks is ‘worrying’, which shows Vietnam’s finance market has high latent risks and doesn’t bring expected profits to foreign investors.

“I don’t think these are just separate moves. I believe this is a trend. And the withdrawal by foreign banks is worrying,” he said.

Meanwhile, a banker said he cannot see any problems. “The conditions in Vietnam are now much better than 20 years ago, when foreign banks began flocking to Vietnam,” he said.


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