Vietcombank plans to invite bids from insurers for exclusive rights to distribute life insurance products through its network.
The deal between Vietcombank and its partner is expected to be for at least ten years and be worth as much as US$1 billion over the life of the contract.
Vietcombank chose Credit Suisse Group AG to advise it on finding a new insurance distribution partner.
According to Bloomberg, insurers have been attracted to a growing middle class in Vietnam, which chalked up average economic growth of 6.3% during 2005-2017.
Deemed as win-win deals for both commercial banks and insurance companies, bancassurance partnerships have been developing in Vietnam in recent years.
The model creates a convenient and reliable sales channel for insurance firms while giving banks stable source of non-interest income through sales commissions.
Last year, several bancassurance deals were inked, including Sai Gon Thuong Tin Commercial Joint Stock Bank’s 20-year agreement with Dai-ichi Life Holdings Inc. and Techcombank’s 15-year deal with Manulife Financial Corp.
Contributions of bancassurance sales in Vietnam jumped from 1 percent in 2013 to more than 10% in 2017. This is a much smaller amount than in other Asian markets like Thailand, Indonesia, Singapore and Hong Kong (China), where bancassurance makes up between 30% and 50 % of overall insurance distribution.