The government says it is keen on developing consumer finance via fintech and mobile payment solutions. Photo acquired by VnExpress
Korean giant KB Financial Group is completing procedures to open a branch of its Kookmin Bank in Hanoi.
The lender’s first branch has opened in Ho Chi Minh City, and KB Financial Group’s chairman and CEO Yoon Jong Kyoo has told Deputy Prime Minister Vuong Dinh Hue at a recent meeting the company plans to invest a further US$110 million in Vietnam.
In 2017 KB Securities, a subsidiary of KB Financial Group, sealed a deal to take over 99.4% of Vietnam’s Maritime Securities for US$33.2 million.
Yoon said he was impressed by Vietnam’s development and prospects, and the group’s business here is profitable. “So we want to expand our banking and finance business in Vietnam.”
Hue told Yoon the government has agreed in principle for the State Bank of Vietnam to go ahead with procedures to license the bank’s Hanoi branch.
Lotte Card’s CEO Kim Chang-kwon, at a meeting with Hue on September 6, also spoke about the firm’s expansion trajectory in Vietnam.
Last March the company signed a deal with one of Vietnam’s biggest private lenders, Techcombank, to buy out its subsidiary, Techcom Finance.
The acquisition made Lotte Card the first Korean credit card company to enter the Vietnamese market.
Neither party has disclosed the value of the deal, but Korean newswire The Investor estimated it at VND1.7 trillion (US$74.67 million).
Kim said the buyout would enable Lotte Card to expand its business in Vietnam, where it now has 1.5 million clients.
Lotte Card, a subsidiary of Lotte Group, is focusing on non-cash consumer finance and application of fintech in Vietnam.
Since last year there has been an influx into Vietnam by Korean financial institutions with a string of acquisitions.
Shinhan Bank Vietnam acquired ANZ Vietnam’s retail business for an undisclosed sum, and there was the KB Securities-Maritime Securities deal.
Last January Shinhan Card bought out Prudential Vietnam Finance for US$151 million, while the Lotte Card-Techcom Finance deal happened a couple of months later.
The Republic of Korea (RoK) is more or less a maturing economy with relatively low GDP growth rate of 2%-3%. Its companies including financial institutions are looking for growth opportunities and Vietnam is one of their first options.
More Korean financial institutions are eyeing Vietnam to cater to the needs of Korean manufacturers who entered the country earlier.
RoK is the largest foreign investor in Vietnam, according to the Ministry of Planning and Investment. As of August 20 it had registered to invest US$61.08 billion, or 18.3% of the country’s total FDI pledges, followed by Japan with US$55.84 billion.
Apart from catering to the needs of Korean manufacturers in Vietnam like Samsung and LG and their hundreds of parts suppliers, Korean financial institutions also see a potentially huge consumer market in the country’s quickly expanding higher- and middle-income groups.
Hue told Yoon that, given the country’s improved economic conditions, the government wants to expand the financial market, especially amid the fourth industrial revolution and digitization.
“The government will accelerate equitization, state equity divestment and stock market listing, and consider launching derivatives in the stock markets.”
The government has also tasked the central bank with speeding up the restructuring of credit institutions including non-banking entities, he said.
At the meeting with Kim, he said his government is keen on developing consumer finance via fintech and mobile payment solutions.
It encourages and supports Lotte Card’s investment in non-cash consumer finance, he said.