Foreign Investors Target Vietnam Commercial Banks

Foreign investors are increasingly buying into Vietnam’s fast-expanding banking industry, creating favorable opportunities for local banks to boost their operations.

Overseas companies now see joint-stock commercial banks in Vietnam as an attractive investment option following the country’s rapid-growing financial market and the fact that banks are making huge profits.

Foreign investment into local banks not only offers banks access to huge capital sources, but provides them with technical assistance, modern banking technologies and retail sales and services experience, according to financial and banking experts.

With consumer spending in Vietnam rising by 23 per cent – the highest in Asia – and an annual 28 per cent surge in banking deposits, banks have great potential to develop their services, say foreign entrepreneurs.

Piece of the pie

Recently, British bank Standard Chartered acquired 8.56 per cent of local Asian Commercial Bank’s (ACB) stakes.

Although the price on the floating market for an ACB share is only 4.1 million VND (285 USD), Standard Chartered paid 6.2 million VND (about 390 USD) per share.

But, the share sale, which helped ACB raise 22 million USD, was not a surprise to financial and banking experts since the bank is no doubt one of the largest and fastest-growing banks in Vietnam.

Meanwhile, another local large joint-stock commercial bank, Sacombank, is also conducting final talks with Australian bank ANZ over its plans to buy 10 per cent of Sacombank’s stakes.

ANZ will pour about 27 million USD into Sacombank, and become the bank’s third foreign investor, said a Sacombank leader.

Make or break

As experts and banks anticipate fiercer competition when Vietnam opens up its industry to foreign banks, the increased foreign investment in local banks has created good opportunities for banks to expand their operations, say experts. Bigger operations will help local banks compete against foreign giants, they add.

Vietnam’s banking system is still much smaller than in other regional countries.

Registered capital of most local banks range from about 12.6 to 25.2 million USD each -except for Sacombank and ACB, which has capital of around 79 million and 38 million USD respectively.

Meanwhile, capital of banks in regional countries like Thailand, the Philippines and Indonesia is more than 100 million USD each on average.

These small capital volumes have prevented Vietnamese banks from accessing large-scale customers with huge financial demands, experts say.

Reported by Thanh Xuan – Translated by Hieu Trung.
Story from Thanh Nien News
Published: 21 July, 2005, 20:46:11 (GMT+7)
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