The increase of foreign investors’ activities also made the pressure of competition in the monetary market become more and more fierce, but it was also predicted earlier. However, the contribution of foreign banks also brings many opportunities for the domestic monetary market. Consumer will be the most beneficiary.
Money market has just witnessed the launch of a new participant. Accordingly, on July 2, Shinhan Card, the leading credit card issuer in Korea, officially opened the Shinhan Vietnam Finance Limited Company (Shinhan Finance) in HCM City. This is a 100 percent foreign-owned consumer finance company (formerly Prudential Vietnam Finance CompanyPrudential Finance), officially operating under the brand “Shinhan Finance” from 2019.
At the launching ceremony, Lim Young Jin, President and Chief Executive Officer (CEO) of Shinhan Card, said: “”I am very honored to have the opportunity to become a part of the growing financial market in Vietnam.”
Vietnam’s financial and monetary market is developing extremely strongly with more and more participation of foreign financial institutions.
On June 25, LOTTE Finance Company (LOTTE Finance) also officially launched in Vietnam market after six months of doing business. Previously, another representative from Korea, Kookmin Bank, also officially opened a branch in Hanoi, its second branch in Vietnam.
Currently, Vietnamese currency market has nine foreign-owned banks including ANZ, HSBC, Standard Chartered, Shinhan Bank, Hong Leong Bank, CIMB Bank, Public Bank Berhad, Wooribank and most recently UOB. In addition, there are about 50 foreign bank branches, more than 50 representative offices of foreign credit institutions and many 100 percent foreign-owned finance companies.
Certainly these numbers will continue to increase as many large foreign financial institutions are still expressing their desire to contribute to Vietnam’s market, even though the way of buying banks weak in Vietnam.
In addition to strengthening the presence in Vietnam, the financial capacity of foreign banks is also increasing. For example, Vietnam Public Bank Limited has just been approved by State Bank of Vietnam (SBV) to increase its charter capital from 3.645 trillion dong to 6.645 trillion dong. The statistics of the SBV also showed that the growth rate of equity capital and chartered capital of foreign joint venture banks was always two to three times higher than that of state-owned commercial banks and commercial banks.
Specifically, as of the end of April, equity capital of foreign joint venture banks increased by 8.7 percent to 177.037 trillion dong; while the growth rate of equity of state-owned commercial banks was only 5.06 percent and commercial banks was 4.18 percent. Similarly, the charter capital of foreign joint venture banks also increased by 2.76 percent to 116.619 trillion dong, while at the same time, the charter capital of domestic banks only increased by 0.75 percent and 0.61 percent respectively.
Not only expanding their activities, but foreign banks also promoted in-depth development. SBV has continuously decided to add more activities to foreign credit institutions, such as the addition of securities depository activities to 100 percent Korean-owned Wooribank Vietnam recently.
But the most important thing is the encroachment of foreign financial companies in retail banking, especially consumer finance, which were previously considered as the strength of domestic credit institutions. A typical example is Shinhan, after spending $151 million to acquire Prudential Finance in Vietnam, Shinhan Finance makes no secret of its ambition to become one of the leading financial companies in Vietnam.
Lim Young Jin, President of Shinhan Card, said that with the strong combination of Shinhan Card’s technology platform and outstanding financial products and over 10 years of experience in developing consumer lending market of Prudential Finance, Shinhan Vietnam Finance Company committed to striving to become the best customer support financial company in Vietnam
The strengthening of foreign financial institutions in Vietnam is to exploit the advantage of nearly 100 million people with a young population structure, fast and stable economic development of Vietnam. Besides, it is to welcome opportunities of new generation free trade agreements such as CPTPP and EVFTA that Vietnam has just signed and is implementing.
However, the increase in the activity of foreign banks also makes competition pressure on the monetary market become more and more fierce; But that was predicted early. In addition, the presence of foreign investors also brings many opportunities for the domestic monetary market and consumers will be the most beneficiaries.
