Competition between domestic and foreign banks heats up

Five 100% foreign owned banks were licensed marking the presence of foreign banks in Viet Nam. Foreign banks will be treated fairly like domestic banks under WTO commitments. HSBC is the first bank to have established wholly owned foreign banking operations in Vietnam early this week.

While Korea's Shinhan One Member Ltd Co and Malaysia's Hong Leong Bank Viet Nam are new names for Vietnamese people, three banks HSBC, ANZ and Standard Chartered are well known as good individual credit service suppliers in the country.

Now, foreign subsidiary banks can compete directly with domestic lenders instead of operating as a branch of parent bank. The HSBC Vietnam's general director Thomas Tobin happily stated that his bank can now undertake capital mobilisation, lending services, payment services, foreign currency services and network expansion easily without limitations.

'Operating as a subsidiary bank will help HSBC enter deeper into Vietnam's economy and finance market as per the international banking specifications,' he added.

Previously, foreign banks associated with domestic partners in developing networks, and insurance companies to launch online transactions. In the first quarter of 2009, along with headquarters in HCM City and a Hanoi branch, HSBC will open branches in Binh Duong and transaction offices in HCM City.

Vo Van Chau, general director of Orient Commercial Joint Stock Bank said that foreign banks are not tigers and local banks are not young rabbits, meaning that local banks have created a new face for the market through upgrading their internal strengths to compete with foreign banks.

Last year, the impressive chartered capital increases belonged to joint stock banks. ACB reached over six trillion dong, Eximbank over seven trillion dong and Sacombank over five trillion dong. Joint stock banks also actively expanded networks and joined hands with corporations, groups and exporters.

Earlier, foreign banks had intelligently signed strategic cooperation deals with domestic partners. According to Thomas Tobin, his bank's 20% capital contribution in Techcombank does not mean that products, services as well as development strategies of two sides will be the same. Customers who come to Techcombank will not want to see the presence of HSBC there and vice versa.

The majority of about nine million bank accounts are in big cities. Most banks including ACB, Eximbank, and Techcombank pay attention to fairly high-income earners, foreign individuals and businesses in Vietnam. Foreign banks that want to install an ATM will have to obtain State Bank of Vietnam's approval. (SGTT)