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15 October 2009

Foreign banks strengthen their foothold in Vietnam

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Foreign banks are expanding their network to try to penetrate Vietnamese markets, said Thursday.

In the latest report by the State Bank of Viet Nam (SBV), Vietnam has 51 credit institutions, including five 100 percent foreign owned banks, 38 foreign bank branches, four finance companies and four finance leasing companies belonging to foreign banks. In addition there are five joint venture banks with 19 branches.

The foreign-owned finance institutions are holding 10.9 percent of total assets and 11.8 percent of stockholder equity. The capital mobilised by the institutions accounts for 9.3 percent of total outstanding loans of the whole banking system and 34.5 percent of pretax profit of all commercial banks.

To date, wholesale remains the main business of foreign institutions, since foreign banks, due to the limitation on the number of retail branches they can set up, still cannot compete with domestic banks in retail banking.

The main clients of the foreign banks are foreign invested projects and Vietnamese enterprises, which need capital in foreign currencies to import equipment and materials for domestic production.


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