VietNamNet Bridge - Five of the commercial banks in Vietnam either have established or are preparing for expanding overseas, mostly in Southeast Asian countries.

Military Bank (MB) has recently opened a branch in Laos with a capital of $12 million, while Vietinbank has similar plans.

The favorite destination of those members is Southeast Asian countries, since those financial markets are in early stages of new development and promising many opportunities, and some other developed markets.

For the initial destinations of Vietnamese banks such as Laos and Cambodia, although development scale of these markets is limited, they are highly valued in potential.

The capital markets there have begun to take shape since the stock market officially went into operation. Furthermore, they are the countries that have trade relations and traditional border trade with Vietnam.

Some banks from other countries such as China and Korea are also eyeing these markets.

The year 2010 is a rather special for Sacombank when its two branches in Laos and Cambodia, after cutting losses, began being profitable. Moreover, in early November, Sacombank Securities Company (SBS) officially received license to operate in Cambodia.

For BIDV, its member unit BIDV's Insurance Company (BIC) started getting profit from the insurance joint venture with Laos.

For MB, its strategic shareholder Viettel has arranged infrastructure and human resource supports in Laos. It would not be surprising if in the near future, Thang Long Securities Company (TLS), a member of MB, also enters this market.

Before MB, Viettel has participated in those two markets and been gaining initial success. In terms of market share, Viettel ranks first in Cambodia and second in Laos, the businesses have both been profitable after just one to two years of operation.

In banking sector, other advantages of Vietnam's bank when penetrating those two markets are management capacity, financial capacity and technology. These are the foundation elements for success in this particular business.

After Laos, MB targets Cambodia next year. MB plans to be in top five foreign bank branches with large total assets and top three bank branches with highest return on assets ratio (ROA) in Laos by the end of 2015.

Compared to many banks in the world, those Vietnamese banks are relatively late, it is because the route to go abroad is not simple. Banks must firstly ensure requirements on financial capacity, and then they will face technological barrier.

Sacombank's plan in China was suspended due to the high demand for technological barriers of the host country.

Additionally, for new markets, along with language, cultural, internal competition barriers, a notable difficulty is to be aware of the legal environment.

Certainly, potential-opportunity is one of the determinants for investment decisions.

Source: Tuoi Tre