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Banking market 2010: who is holding the upper hand?   2010-12-09 - VNN

State owned banks, which are backed by the State and have powerful financial capability, have been dominating the market for the last many years. However, joint stock banks have been trying to “encroach on state owned banks’ territory”.

Many changes have been seen in the picture of Vietnam’s banking sector in 2010. The market is witnessing the great efforts made by joint stock banks to expand their market share. However, state owned banks remain a big power.

Thirty seven joint stock banks, five state owned banks, 50 foreign banks and foreign bank branches, two banks that serve social policies, 22 finance companies and five joint venture banks are operating in Vietnam.

Big changes


State owned banks now have every reason to worry that a part of their market share has been fallen into the hands of joint stock banks. The sharp increase of the number of joint stock banks and their expanding network alone have put a hard pressure on state owned banks.

According to the State Bank of Vietnam, the volume of mobilized capital and outstanding loans of foreign banks, finance companies, joint venture banks and people’s credit funds just account for a small proportion in the total volume of the whole banking system, about 15 percent of the outstanding loans and 10 percent of mobilized capital.

The biggest market share is still being held by state owned banks. However, joint stock banks have been making every effort to obtain bigger pieces of the cake.

In December 2007, state owned banks held 59.3 percent of the credit market share, while joint stock banks 27.7 percent. Regarding the mobilized capital, the figures were 59.5 percent for state owned banks and 30.4 percent for joint stock banks

However, the figures have changed considerably by March 2010 with the market share of state owned banks dropped to 54.6 percent and 31.2 percent, respectively, and the market share of joint stock banks increasing to 48.3 percent and 42.6 percent, respectively.

State owned banks still the leaders

Despite the great efforts by joint stock banks, they still can not “swallow” state owned banks. State owned banks are still gaining the upper hand in the market.

General Director of a HCM City-based joint stock bank said that it is not easy to compete with state owned banks to seize more market share from them.

“I am always asked why I don’t think of moving towards the north. However, state owned banks still have a long arm, not only in the north, but all over the country. They have loyal big clients – the state owned enterprises,” he said.

The banker said that while state owned banks can provide big loans worth billions dollar with no mortgaged assets, joint stock banks can not, because they always bear the pressure from shareholders.

“State owned banks have big scale, long history and loyal clients. It is not easy to scramble with them for clients,” he said.


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