Foreign banks are keen to boost investment in Vietnam but they prefer buying into local banks to expanding their branches in the country, shows a survey. The survey of 24 of 28 foreign banks that have Vietnam branches was recently undertaken by Vietbid, a Vietnamese consultancy hired to give advice to the State Bank of Vietnam (SBV) to build strategies for the banking system’s world integration.
“It is expensive to open new branches,” senior Vietbid consultant Pham Quang Thanh said on the sidelines of a seminar on the banking sector’s integration held by the SBV and the Vietnam-Australia Capacity Building for Effective Governance (CEG) Facility in HCM City yesterday.
“Most foreign banks came here to serve multinational clients. If they want to expand services to Vietnamese customers, the best way will be to team up with local banks,” Thanh said, adding the survey showed network expansion was not their priority. Foreign banks are also seeking to diversify services and this is different from local banks that focus on improving the capacity of their staff, dealing with bad debts, scaling up their equity and investing in IT, Thanh said.
The central bank has recently allowed the Standard Chartered Bank to buy into the Asia Commercial Bank (ACB) and the ANZ Banking Group in the Saigon Thuong Tin Commercial Bank (Sacombank).
Lawrence Wolfe, general director of Deutsche Bank Vietnam, said he encouraged the central bank to allow foreign bank branches to accept deposits in foreign currency from local companies that do not borrow from them.
Foreign banks are now banned from taking foreign currency deposits from Vietnamese individuals. Wolfe said, “The restriction would also be relaxed, particularly in case foreign funds come from remittances from abroad.”
In addition, foreign bank branches should be allowed to locate automated teller machines outside their premises as local banks have built an extensive ATM network nationwide, Wolfe said.
Under the Vietnam-US bilateral trade pact, American banks are not allowed to install ATMs outside their offices unless Vietnamese banks do so.
Nguyen Huu Nghia from the central bank’s banking strategy development department said the opening up of the market would be considered in a proper time.