The increasing number of foreign banks operating in Vietnam has contributed to making the domestic financial market more active and attractive.
Foreign banks have been present in the country since the early 1990s under two forms: foreign bank branches and joint venture banks.
The Credit Organisation Law (revised), which went into effect in 2004, allowed banks to conduct fully foreign-owned operations in Vietnam. However, until Vietnam ’s accession to the World Trade Organisation (WTO) in 2007, the number of foreign credit organisations in the country was modest.
Since then, 44 foreign bank branches, five joint venture banks, and more than 50 representative offices of foreign credit organisations have been granted operation licences.
Due to the Government’s WTO commitment, in 2008 the State Bank of Vietnam allowed three fully foreign-invested subsidiary banks to establish and operate in the country. They are Standard Chartered Bank, the Hong Kong Shanghai Banking Corporation (HSBC) and the Australia and New Zealand Banking Group (ANZ).
Most of the foreign credit organisations have opened their branches in the two major cities of Hanoi and HCM City.
To facilitate foreign banks’ operations in the country, the Government and the central bank have made great efforts in creating a legal framework in line with international rules and standards.
Foreign credit organisations have acted as “bridges” which attract foreign investment to Vietnam. They have also proved to be significant sources of capital to supplement the country’s financial market.
Moreover, foreign banks have made important contributions to bringing modern banking technology and the best banking management methods to the country.
Indeed, many foreign banks have already formed strategic partnership with Vietnamese banks. Their participation has helped domestic banks improve their potential to raise capital and gain access to modern banking technology and effective management experience.
Additionally, foreign bank branches receive support from their parent banks, particularly in capital resources. This makes it easier for them to expand lending.
Source: VNA