Korean banks expand in Vietnam
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Following Shinhan Vietnam’s successful acquisition of ANZ Vietnam’s retail business, fellow Korean banks have also expanded their sizes and market share in Vietnam, seizing the lead in the foreign bank race on the Vietnamese market.
Shinhan getting stronger
Shinhan’s takeover of ANZ Vietnam’s retail arm has made its competitors worry, as Shinhan seems to get closer to becoming the champion of foreign banks in Vietnam, especially as the growth rate of the current leader HSBC Vietnam has been wildly fluctuating over the last five years.
Despite a relatively low chartered capital of only VND4.547 trillion (US$200 million) and being less active than HSBC Vietnam—the number one foreign bank in Vietnam in terms of chartered capital, total assets, and profit, in 2016 Shinhan Vietnam’s profit exceeded VND1 trillion (US$44 million).
This amount far outstripped numerous, similar-sized domestic banks and all foreign banks in Vietnam. Shinhan Vietnam’s profit was lower than HSBC Vietnam’s only.
According to the acquisition agreement with ANZ, Shinhan Vietnam will have eight ANZ’s branches and transaction offices in Hanoi and Ho Chi Minh City, carrying on the entirety of the ANZ retail banking staff and 125,000 individual clients in Vietnam, as well as AUD1.1 billion (US$824 million) in outstanding loans and deposits.
With 20 years of experience on the Vietnamese market and the takeover of ANZ’s retail business, Shinhan Vietnam’s position is getting steadier.
At present, Shinhan Vietnam has a large number of corporate clients, primarily made up of Korean investors in Vietnam.
Before the agreement with ANZ, Shinhan Vietnam had been continuously expanding its network. At the middle of April 2017, the State Bank of Vietnam permitted it to open a representative office and four branches and transaction offices in Hanoi and Ho Chi Minh City.
Korean banks make foray into Vietnam
“With 20 years of experience on the Vietnamese market and the takeover of ANZ’s retail business, Shinhan Vietnam’s position is getting steadier.”
Following Shinhan Bank, many other Korean banks are increasing their influence in the Vietnamese market. This expansion is easy to understand, as Korea is the biggest foreign investor in Vietnam.
Currently, two of the eight 100% foreign-owned banks in Vietnam are from Korea (Shinhan and Woori Bank). Besides, many big Korean banks are starting to join the Vietnamese market by establishing branches or representative offices.
These include Kexim, KEB Hana, Industrial Bank of Korea, Kookmin, Busan, and Nonghyup.
In terms of size and market share, Shinhan and Woori Bank are in the lead among all foreign banks in Vietnam. They are formidable competition even to well-established Vietnamese banks.
By providing good services and competitive interest rates, Korean banks are luring away a large number of clients from domestic banks.
For instance, in Shinhan Vietnam, the outstanding loan balance of Vietnamese corporate clients accounts for at least 50% of its total corporate credit.
In addition, Shinhan’s interest rates for home loans, car loans and consumer loans are lower than in many domestic banks. This has attracted a huge number of individual clients, especially from the middle and high income bracket.
Besides Shinhan, newbie Woori also plans to deploy plenty of retail products in Vietnam in the course of 2017, such as cards, unsecured loans, and mortgages.
Abundant capital, modern technology inherited from parent banks, knowledge of the Vietnamese market, and the huge number of corporate clients make up the rare advantages for Korean banks to successfully join the Vietnamese retail market, likely making domestic and other foreign banks worry.
Questions & Answers
Q.What specifically did Shinhan acquire from ANZ Vietnam's retail business?
What specifically did Shinhan acquire from ANZ Vietnam's retail business?
Shinhan Vietnam gained eight ANZ branches and transaction offices, the retail banking staff, 125,000 individual clients, and AUD1.1 billion in outstanding loans and deposits. This significantly strengthens their retail presence.
Q.Why are other Korean banks expanding into Vietnam?
Why are other Korean banks expanding into Vietnam?
Korea is Vietnam's biggest foreign investor, making the expansion understandable. Korean banks like Shinhan and Woori Bank are already established, and others are entering the market via branches or representative offices.
Q.How are Korean banks attracting clients away from domestic Vietnamese banks?
How are Korean banks attracting clients away from domestic Vietnamese banks?
Korean banks offer good services and competitive interest rates, which draw clients. Shinhan, for example, has lower interest rates on various loans, attracting many individual clients from higher income brackets.
Q.What advantages do Korean banks have in the Vietnamese retail market?
What advantages do Korean banks have in the Vietnamese retail market?
They benefit from abundant capital and modern technology from parent banks. Their existing knowledge of the Vietnamese market and a large base of corporate clients, particularly Korean investors, also provide significant advantages.
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