Local banks are displaying a growing appetite for global reach.
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In late 2007, Ho Chi Minh City-based Sacombank was the first Vietnamese bank to set a foothold in a foreign market by opening a representative office in China.
In the following years, the bank launched a branch office in Laos (2008) and another in Cambodia (2009). Now local banks such as SHB, BIDV, VietinBank and Agribank followed by setting up branch offices in Laos, Cambodia, Czech, Singapore and several other countries.
Shortly after making inroads into foreign markets, banks unveiled healthy business figures. For instance, after two years operating in Cambodia, Sacombank founded a wholly owned bank in this country. As of March 20, 2012 its Cambodian affiliate reported $47 million in total deposits and $60 million in outstanding loans.
After several years in Laos and Cambodia, BIDV has been included among top performers in these markets. The bank also plans to enter Myanmar.
In February, SHB inaugurated a branch office in Cambodia and raised $2.5 million from local residents. SHB had developed a well-conceived strategy for outbound investments, said its chairman Do Quang Hien.
Maritime Bank is also looking to establish a branch office or a wholly owned affiliate abroad.
But, only VietinBank has entered a giant market Frankfurt, a leading business and financial centre in Germany.
“Europe’s biggest financial centre expresses our strategy to grow into Vietnam’s leading financial group capable to compete head-on with foreign players,” said its chairman Pham Huy Hung.
“Besides Germany, our bank set to expand footprints in other markets like Czech, Poland, the UK or France,” Hung added.
“In respect to banking operations, striving for global reach is the right move since banks need to operate in multi markets for alleviating risks,” said senior financial expert Dr. Nguyen Tri Hieu.
“However, Vietnamese bank operations abroad remain limited in scope. It does not require much money to open a branch or representative office in foreign markets. For example, it only needs $15-20 million for a representative office to enter into service in the US,” said Hieu.
Economists assumed outbound investment ventures could help local banks promote brand values, enrich experiences and uphold local import export firms.
But, banks need to scale up capital scope, technology and particularly management expertise to succeed in breaking into big world financial centres.