But the situation is different this year. Foreign banks tend to expand their operation in Vietnam by opening more branches and transaction offices over the country.

The move shows that foreign banks have big ambitions in the Vietnamese market and want to compete with Vietnamese banks in the retail banking sector.

Public Bank got the nod from the State Bank of Vietnam (SBV) to open three more branches and two more transaction offices. When the plan is fulfilled, the bank will have 18 branches and offices in major cities of Vietnam.

Prior to that, some other foreign banks took similar moves. Woori Bank Vietnam, for example, got approval for its plan to open five more branches and one transaction office.

In mid-May 2018, Shinhan Bank Vietnam officially opened four branches and transaction offices in Hanoi and HCM City, raising the total number of transaction points to 30. Shinhan with the largest network of any foreign bank in Vietnam.

Other foreign banks have poured more capital into their branches in Vietnam. NongHuyp Bank Hanoi branch and Bank of China HCM City branch have got the nod from the State Bank’s Governor to increase their capital. 

The former has been allowed to raise capital by 2.28 times, from $35 million to $80 million, while the latter from $80 million to $100 million.

Meanwhile, some foreign banks which have representative offices in Vietnam have decided to extend their operation in Vietnam. DBS, JCB International in Hanoi both asked for extension of operation for five years.

Thoi bao Ngan hang reported that the leaders of Exim Thailand in May had a meeting with the representative of the State Bank, expressing its willingness to enter the Vietnamese market by setting up a representative office here.

However, some other banks still cannot make decision on whether to enter Vietnam. Krungsri, a large bank from Thailand, has postponed its plan to make investment in Vietnam after two years of surveying the market. The bank thinks the M&A cost may be higher than estimated, while there exist disadvantages in licensing and in the business environment.

Most foreign banks had a prosperous year in 2017 with business results better than Vietnamese banks with the same scale in capital and total assets.

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Mai Thanh