“Vietnam rush”

Asian bankers have been trying every possible means to increase their presence in Vietnam, which promises to be a lucrative market when the country joins the 600- million-consumer ASEAN Economic Community (AEC) this year-end.

Thai Kasikorn Bank has opened two representative offices in Hanoi and HCM City. Prior to that, DBS, a Singaporean banker and Maybank from Malaysia also landed in Vietnam.

Kasikorn said it will scale up its operation in Vietnam, planning to set up more offices and branches if it can get licenses from the watchdog agency. The banker had maintained cooperation with two Vietnamese big bankers – VietinBank and Agribank – until it made its official presence in Vietnam last March.

Most recently, in late March, the State Bank of Vietnam approved the establishment of the Malaysian Public Bank Berhard (PBB) in Vietnam.

A senior executive of a fund management company noted foreign bankers are coming to Vietnam because they can foresee that the foreign direct investment (FDI) will increase rapidly in the time to come, when AEC takes shape.

“Foreign bankers target clients who are their fellow-countrymen coming to Vietnam to set up their production bases,” noted Nguyen Tri Hieu, a renowned economist.

This explains why there are many bankers from South Korea, Japan, Singapore and Thailand in Vietnam. They are from countries which are the largest foreign investors in Vietnam.

South Korea, for example, is leading foreign investor in terms of tmcapital poured into Vietnam in recent years (South Korean investors poured $7 billion into Vietnam in 2014, or 36.2 percent of total FDI capital). This has helped lure more South Korean bankers to Vietnam.

Industrial Bank of Korea has opened one more branch, in Hanoi. Meanwhile, Shinhan Bank Vietnam, a 100 Korean owned bank, has opened three more branches since October 2014. The representative of Kasikornbank also said the bank strives to connect Thai businesses with Vietnam and other regional businesses.

Stiff competition anticipated

An unwritten law exists that Vietnamese banks serve Vietnamese clients (state-owned businesses, joint stock companies, individuals), while foreign banks target foreign invested enterprises in Vietnam.

However, it seems that the banks all want to encroach on others’ “territories”. Pham Quang Dung, CEO of Vietcombank, one of the Vietnamese largest banks, said foreign invested enterprises prove to be “VIP” clients and that the bank has been striving to lure them. However, Dung admitted that the number of foreign clients remains modest.

Meanwhile, some foreign bankers have stated they are targeting Vietnamese enterprises, especially large general corporations, which in their eyes are also very attractive clients.

By Kim Chi - VietNamNet Bridge - April 11, 2015