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Domestic banks getting ready for new competition   2009-01-08 - Saigon tiep thi

Vo Van Chau, General Director of Phuong Dong Bank, once said that foreign banks were not tigers and domestic banks were not young rabbits. To Chau, the appearance of foreign banks in Vietnam is not too great a threat. 

 

 
The landing of foreign banks in Vietnam officially began when the State Bank of Vietnam approved five 100% foreign-owned banks. The banks, unlike foreign bank branches, can get treatment equal to domestic banks under Vietnam’s WTO commitments.  

 

While South Korea’s Shinhan Vietnam Bank and Malaysia’s Hong Leong Bank Vietnam are still unfamiliar to Vietnamese clients, HSBC, ANZ and Standard Chartered have become well known in the country. 

 

HSBC, which officially opened last week, besides the head office in HCM City and the Hanoi branch, plans to open a branch in Binh Duong province, a transaction centre and seven transaction offices in HCM City. 

 

Analysts have warned about the strength of foreign banks in Vietnam. The banks which do not bear limitations in operation like bank branches can directly rival domestic banks, as they can mobilise capital from the public, lend capital, provide payment and vault services, carry out foreign currency trading, while they are not limited as far as the number of branches they can have. 

 

However, domestic bankers say that they are not too afraid of foreign banks.

 

Asia Commercial Bank (ACB) now has the chartered capital of VND6tril, while Eximbank over VND7tril and Sacombank over VND5tril. Domestic banks have also been trying to expand their networks, while shaking hands with general corporations, economic groups and exporters to get profit. 

 

In fact, foreign banks had been trying to ‘become acquainted’ with domestic banks through big investment deals, becoming foreign strategic partners of the banks. 

 

According to the director of a domestic bank, the important thing now is that the market segments of foreign and domestic banks are not the same and are not overlapping. 

 

Thomas Tobin, General Director of HSBC Vietnam, when talking about the 20% of Techcombank shares that the banks holds, said that clients do not want to see HSBC at Techcombank when they go there, and vice versa. He talked about the diversification of the market and more choices for clients. 

 

The domestic banker said that foreign banks mostly focus on clients with high incomes, and individuals and foreign-invested enterprises in Vietnam. Moreover, foreign banks cannot launch all their services onto the market at once. For example, they need to seek permission from the State Bank to install a new ATM. 

 

Analysts say that domestic banks have shown their strength by still being able to gain big profit in 2008 despite the big difficulties of the national economy. 

 


Other Banking News

Banks still lacking foreign currencies   2009-01-07

‘Room’ for foreign ownership ratio in banks should be raised to 35%   2009-01-06

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