Where do Vietnamese banks do businesses outside Southeast Asia?

13-Jul-2019 Intellasia | Zing News | 6:02 AM Print This Post

Most domestic commercial banks have expanded their correspondent bank network to many countries and territories around the world. However, banks that can open representative offices or branches abroad are not many.

Foreign markets of banks are mainly concentrated in Laos and Cambodia. This is also the two biggest foreign markets of Vietnamese banks.

Sharing with Zing.vn recently, the leader of a large commercial bank said that opening a representative office abroad costed a lot. Particularly, licensing procedures could also last for years, the cost of market research and operation maintenance is quite expensive. Therefore, not many banks could open representative offices abroad, especially outside Southeast Asia.

Currently, only a few large banks have investment activities outside of Southeast Asia, mainly state-owned banks. Most recently, Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) said it was licensed by the Federal Reserve System (FED) to set up a representative office in New York, marking it as the first commercial bank in Vietnam to be licensed to open a representative office at America.

In the foreign business network of this bank, in addition to a new bank established in Laos in October 2018, Vietcombank also owns a representative office in Singapore, and two other subsidiaries abroad. Specifically, Vietcombank currently owns 100 percent capital of Vietnam Finance Company (VFC) in Hong Kong (capital of 117 billion dong) and 87.5 percent capital in Vietcombank Money Transfer Company (VCBM) in the US (205 billion dong).

In particular, VFC operates as a miniature bank in Hong Kong market including receiving deposits, credit, payment services, money transfer, etc. In the latest year, that company brought Vietcombank nearly 20 billion dong of pre-tax profit.

And VCBM operates in the field of money transfer from the US to Vietnam. Although established in 2009, but according to Vietcombank, 2018 was the first year the company recorded positive profit. Without disclosing specific profits, the bank said that VCBM’s total sales in the past year were approximately 3.7 trillion dong, up 53 percent compared to 2017.

While Vietcombank chose the US as a big market outside of Southeast Asia, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) chose the Europe to develop, specifically Germany. The bank currently owns two branches in Frankfurt and Berlin (Germany), and is the first Vietnamese bank to open a branch in Europe.

Without announcing the specific business results of the past year, Erdmann RG Vogt, Vietinbank’s German co-director, said that by the end of 2018, the branch’s total assets increased by over 11 percent, total deposits increased by over 15 percent, outstanding loans increased by three percent, and profits increased by 264 percent compared to 2017.

In 2017, Vietinbank also said that foreign subsidiaries and branches brought in 560 billion dong in pre-tax profit for banks, up nearly 40 percent compared to 2016.

Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) even invested more outside Southeast Asia. The bank currently owns representative offices in the Czech Republic, Taiwan and Russia. BIDV also owned BIDV International Co., Ltd operating in Hong Kong for 10 years, before being closed in early 2018. However, many foreign branches of this bank operate in an inefficient state.

Specifically, in 2018, the sub-bank of BIDV in Laos (LVB) had pre-tax profit of about 220 billion dong, insurance company LVI earned about 13 billion dong. However, BIDV’s total overseas business activities lost 93 billion dong. This loss increased nearly eight times compared to the previous year. It means that, in addition to the Laos market with profits, operating in many other foreign markets of BIDV was losing money in recent years.

Apart from the state-owned bank group, only a few commercial banks have scope outside of Southeast Asia.

Specifically, Military Commercial Joint Stock Bank (MBBank) owns only one representative office abroad in Russia. In 2018, the foreign market contributed nearly 3.5 trillion dong of MBBank’s outstanding loans and brought in over 58 billion dong of pre-tax profit, while the previous year saw a loss of over 47 billion dong.

Meanwhile, both Saigon Hanoi Commercial Joint Stock Bank (SHB) and Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) are very strong investment banks in foreign markets, but the investments of these two banks are still concentrated in Southeast Asian countries, including Laos and Cambodia.

 


Category: Finance, Vietnam

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