VietNamNet Bridge - Economists believe that Vietnam’s emerging economy needs a sufficient number of commercial banks to satisfy people’s demand, and that more than 30 banks is ‘more than enough’.

A series of bank merger & acquisition (M&A) deals were made in the first six months of the year. Phuong Nam Bank was merged with Sacombank, MHB with BIDV, and PG Bank has been admitted by VietinBank and Mekong Bank by Maritime Bank.

The World Bank, in its updated report about Vietnam’s economy in the first half of 2015, noted that unlike previous years, when Vietnam mostly witnessed the M&A deals among small banks, some ‘big guys’ like BIDV and VietinBank appeared in bigger deals this year.

In the Phuong Nam – Sacombank M&A deal, Le Hung Dung, who represents Eximbank’s capital in Sacombank, said that the deal would bring big benefits. 

After the merger, Sacombank has chartered capital of over VND18 trillion which can bring a much larger operation scale and higher financial capability.

“I believe that there would be no other joint stock bank with such a large scale in the next three to five years,” Dung said.

After admitting MDB, Maritime Bank now has VND11.7 trillion in chartered capital, ranking fourth in chartered capital and seventh in operation network.

How many banks does Vietnam need?

Though the number of merged banks is on the rise, the World Bank still thinks it would be a great challenge for Vietnam to cut the number of banks to 15-17 by 2017. 

Dr. Nguyen Tri Hieu, a renowned banking expert, believes that 15 banks would be enough for Vietnam, where the number of people accessing bank services just account for 20-30 percent of the total population of 93 million.

The figure is expected to increase to 50 percent of the population in the next five years. 

In developed countries, only several banks with large operation scale would be enough to serve such a number of clients.

In Vietnam, of the tens of millions of people who can access bank services, the number of clients using e-banking services and e-payment method is modest.

“Thirty commercial banks in such a market proves to be ‘more than enough’,” Hieu said. 

“I think 15 banks would be enough to serve clients. These include 4-5 large banks operating on a national scale with networks throughout the country and 10 banks on a local scale,” Hieu said.

Agreeing that it would be better to have fewer banks, Huynh Trung Minh, a finance expert, said “it would be better to have a team of elite soldiers rather than a large group of new rookies who can use guns.”

NLD