Vietnam lucrative for foreign banks

Last month, United Overseas Bank became the first Singaporean bank to receive an approval to open a wholly-owned subsidiary in Vietnam.

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The decision was announced by the State Bank of Vietnam (SBV) following Singaporean Prime Minister Lee Hsien Loong’s visit to Vietnam on March 21-24. The bank will be the ninth fully foreign-owned bank in Vietnam.

United Overseas Bank, one of Asia’s leading financial institutions with 500 offices in 19 countries and territories, already had a branch in Ho Chi Minh City. Other foreign banks also opened local branches before becoming locally incorporated entities. Similarly, United Overseas Bank at one point held a 20 per cent stake in Phuong Nam (Southern) Bank, which has been merged into Sacombank in 2015.

According to experts, foreign banks with experience from many other markets have quickly expanded to the domestic retail banking market. Despite having smaller market shares, their wide range of service offerings, such as card, credit, home loan, mobile banking or internet banking, might be their advantage.

Here i’s a look back at the progress of six out of the eight foreign banks in Vietnam: HSBC Vietnam and Standard Chartered Vietnam (from the United Kingdom), ANZ Bank (Australia), Shinhan Bank (the Republic of Korea), and Hong Leong Bank and Public Bank Berhad (Malaysia).

The two banks not mentioned have just opened subsidiaries in Vietnam within the last six months. Malaysian’ CIMB Bank was approved by the SBV in September 2016 with an authorised capital of VND3.203 trillion ($141 million). Two months later, Woori Bank made its debut and became the second ROK bank in Vietnam.

HSBC Vietnam

HSBC’s history in Vietnam dates back to 1870 when it opened an office in Saigon, now Ho Chi Minh City. The bank returned and opened a new branch in the city in 1995. In 2009, it became the first foreign bank to have a wholly-owned subsidiary in Vietnam.

HSBC Vietnam is the largest foreign bank in Vietnam. HSBC also holds nearly 20 per cent in Hanoi-based Techcombank.

Continuing the mother company’s’ international strategy to shed non-core businesses, in 2012 HSBC Vietnam sold its 18 per cent stake in leading state-run insurer Bao Viet for $340 million. In 2016, HSBC Vietnam’s net income was VND1.44 trillion ($63.5 million), up 54 per cent on-year, according to the bank’s latest financial statement. It made the lion’s share of its revenue, VND754 billion ($33.27 million), by dealing in foreign currencies.

ANZ Vietnam

One of the first foreign banks to open a branch in Hanoi in 1993, ANZ Vietnam grew its original team of 28 employees to 550 now, who work in eight locations in Hanoi and Ho Chi Minh City, according to the bank’s website. In 2008, ANZ won a licence to open a fully foreign-owned bank in Vietnam. ANZ Vietnam used to be the strategic investor in Sacombank and Saigon Securities Inc. before divesting its holdings in 2012 and 2014, respectively, according to DealStreetAsia.

ANZ Vietnam has been working in accord with the Asia strategy of the parent bank, Australia and New Zealand Banking Group Ltd., Australia’s third largest lender with over 180 years of history. In 2009, in one of its biggest overseas purchases, ANZ paid $550 million to buy several Asian units, including the Vietnamese one, from British lender Royal Bank of Scotland.

However, in early 2016, ANZ closed its business lending to small and medium-sized enterprises in five Asian countries, including Vietnam. Later that year, ANZ announced selling its wealth and retail businesses in Hong Kong, Singapore, China, Taiwan, and Indonesia to Singaporean bank DBS, a departure from the previous ”super-regional strategy,” according to Reuters. The bank will look to exit its retail and wealth assets in the Philippines and Vietnam. This year, five banks have reportedly submitted bids for ANZ’s Vietnamese retail unit.

ANZ earned VND177 billion (US$7.8 million) in net income in the first half of 2016, an increase of 30 per cent from the first half of 2015.

Standard Chartered

Standard Chartered was one of the first international banks to re-open a representative office in Ho Chi Minh City. Since August 2009, following the approval of the SBV, Standard Chartered became a locally-incorporated entity under the name Standard Chartered Bank (Vietnam) Limited, with the registered capital of $61 million, according to Reuters.

Since then, the bank has solidified its position as a leading foreign bank in Vietnam. In 2011, Standard Chartered became the first international bank to join the Smartlink network, enabling its customers to use the bank’s cards at over 5,000 ATMs and 20,000 points of sale nationwide, as reported by VIR. In 2012, the bank was the sole Sovereign Credit Ratings Advisor to the Vietnamese government’.

The bank exclusively distributes Prudential’s life insurance products via a bancassurance partnership that began in 2009 and was extended for another 15 years in 2014.

Financial results were not available on the website of Standard Chartered Vietnam. However, in early 2016, its parent bank announced a 2015 net loss of $2.36 billion, blaming bad debts from falling oil prices. The parent bank was also planning to cut 15,000 jobs.

Hong Leong Bank

Hong Leong Bank, one of Malaysia’s leading lenders, was the first Southeast Asian bank to be granted a licence to operate a wholly foreign-owned commercial bank in Vietnam in December 2008. The bank commenced operations in October 2009 with the opening of its head office and the first branch in Ho Chi Minh City. Its registered capital eventually went up to VND3 billion ($132.3 million).

In 2011, Hong Leong opened its second branch in Hanoi.

By 2015, Hong Leong had opened two more offices in Binh Duong Province and in Cho Lon area of Ho Chi Minh City.

Shinhan Vietnam

A leading ROK lender’, Shinhan Bank has a representative office in Ho Chi Minh City since 1993. In December 2008, the bank was licenced to establish a wholly foreign-owned bank in Vietnam, becoming one of the first five wholly foreign-owned banks in the country.

In November 2011, Shinhan Bank merged with Shinhan Vina (a 50/50 joint venture between Shinhan Bank and Vietcombank) and changed its name into Shinhan Vietnam Company Limited.

Currently, its network has one headquarter and 18 branches in Ho Chi Minh City, Hanoi, Binh Duong, Dong Nai, Thai Nguyen, Hai Phong, and Bac Ninh, according to the bank’s website.

Shinhan Bank is competing by offering digital services. The Korean bank launched its mobile banking service Sunny Bank in December 2015 and Sunny Bank My Car last June, the first service in Vietnam to allow car buyers can get car loans through their mobile devices.

Over twelve months after its release, the Sunny Bank mobile service accumulated 44,000 users, with 90 per cent in their 20s and 30s, according to Korea Joongang Daily newspaper.

The bank’‘s net after-tax profit in 2016 was VND1.03 trillion ($45.5 million), a 15 per cent increase over 2015, according to the financial statements on its website. Interest accounts for the majority of the bank’s revenue.

Public Bank Berhad

In 2015, Public Bank Berhad became the sixth fully foreign-owned bank in Vietnam, after buying out BIDV’s 50 percent stake in VID Public, their $62.6-million 50/50 joint venture. The bank’s website said it had seven branches in Hanoi, Ho Chi Minh City (two branches), Da Nang, Binh Duong, Hai Phong, and Dong Nai.

Public Bank Berhad’s latest financial statement on its website showed a 2015 net income of $4.2 million, a slight increase from the $4.1 million in 2014, with interests making up the majority of its revenue. This income, however, was 16 per cent lower than the 2012 figure of $4.97 million.


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