Heading: Vietnamese Banks Pursue Global Partners for Growth
Numerous financial institutions prefer attractive foreign strategic investment opportunities.
HANOI - Banks across the nation are setting their sights on foreign strategic partners, aiming to bolster their operations. During this year's annual general meetings (AGMs), board members and shareholders of several banks have shown an increased interest in forging partnerships with foreign entities.
Take VIB, for instance. After long-term investor Australia's CBA decided to exit its commitment after 15 years, VIB's Chairman, Dang Khac Vy, shared that the board is actively discussing potential partners that could help the bank navigate the future. Meanwhile, the Chairman of the Board of Directors at SHB, Do Quang Hien, announced that they have already engaged with multiple foreign strategic partners.
However, striking a strategic partner isn't as simple as it seems. It requires careful consideration of both the bank's and shareholders' interests.
Lê Thu Thuy, Vice Chairwoman of SeABank's Board of Directors, disclosed that the bank is currently scouting for potential foreign shareholders, specifically ones from Japan. Instead of dispensing dividends in 2025, SeABank intends to focus on growth and development in the upcoming years, utilizing any remaining undistributed profits to beef up its financial capacity and support its business growth.
At Vietcombank's AGM, plans were presented to offer individual shares equivalent to 6.5% of the bank's charter capital to up to 55 investors, including strategic investors and professional securities investors.
The 30% foreign ownership cap in Vietnamese banks has long been a hurdle for foreign investors eager to participate. According to Le Anh Tuân, an investment director at Dragon Capital Fund Management Company, this cap is a significant barrier, since not all banks have completely filled their foreign quotas.
Ivan Tan of S&P Global Ratings echoes this sentiment, expressing that the cap inhibits foreign investments in our banking sector.
Despite this obstacle, there are still compelling reasons for foreign investors to jump on board. The Vietnamese banking sector remains an alluring investment prospect, given the country's robust economic growth and promising future. Over the past few years, Vietnam has managed to draw in sizable foreign investment into its technology and manufacturing sectors, serving as a crucial component of the global supply chain readjustment.
S&P Global Ratings anticipates that Vietnam will maintain its place as one of Asia's fastest-growing economies by 2025. This rapid growth is expected to be fueled by financing from the banking sector, making it an attractive proposition for foreign investors seeking to invest as strategic shareholders in Vietnamese banks.
Moreover, Vietnam recently lifted the foreign ownership cap from 30% to 49% for select domestic banks, allowing MBBank, HDBank, and VPBank to increase their foreign ownership to 49% once they receive the mandatory transfer of troubled banks as part of the government's financial industry restructuring efforts.
Partnering with foreign entities allows Vietnamese banks to benefit from advancements in technology, improved financial stability, increased market access, and regulatory know-how. Leveraging these benefits, they can become more competitive on the domestic and international stage, improve their financial performance, diversify their financial services, and strengthen their risk management practices.
As a result, forging strategic partnerships with foreign entities has become a critical strategy for Vietnamese banks to boost their competitiveness, expand their market presence, and accelerate growth. Although the article does not specifically reference 2021, the trend of seeking strategic partnerships to enhance capabilities and growth aligns with the broader strategies of Vietnamese banks over recent years.
After the strategic shareholder Australia's CBA withdrawing capital from VIB after 15 years, VIB is discussing with partners to find one or several suitable investors. Photo vib.com.vn
Insights
- Partnering with foreign entities enables Vietnamese banks to access advanced technology, improving their customer services and operational efficiency.
- Incorporating cloud services and AI capabilities, which are crucial for modern banking, can be achieved through these partnerships.
- Additional capital and expertise from foreign partners can help Vietnamese banks strengthen their financial positions and manage risks more effectively.
- Market expansion opportunities are presented when collaborating with foreign partners, such as expanding services to additional countries or regions.
- Foreign partners often bring experience in regulatory compliance and best practices, helping Vietnamese banks improve governance and risk management practices.
- Seeking foreign strategic partners can lead to enhanced competitiveness, increased financial performance, diversification of financial services, and improved risk management for Vietnamese banks.
- Vietnamese banks, like VIB and SeABank, are seeking foreign partners to access advanced technology, such as cloud services and AI capabilities, to improve customer services and operational efficiency.
- Strengthening financial positions and managing risks more effectively can be achieved through partnerships with foreign entities, who can provide additional capital and expertise.
- Collaborating with foreign partners presents market expansion opportunities, allowing Vietnamese banks to offer services in additional countries or regions.
- Foreign partners bring valuable experience in regulatory compliance and best practices, helping Vietnamese banks improve governance and risk management practices.
- By forging strategic partnerships with foreign entities, Vietnamese banks can enhance competitiveness, increase financial performance, diversify financial services, and improve risk management.
