Banks in a tight race to clear big chartered capital hurdle

The central bank last week allowed ANZ Vietnam to raise its chartered capital to VND3 trillion ($157.8 million) from VND2 trillion ($105.2 million), a week after Hong Leong Bank Vietnam’s decision to triple its chartered capital to VND3 trillion.

ANZ Vietnam has showed competitors a clear pair of heels

Under Decree 141 issued in 2006, a commercial bank, including locally incorporated foreign banks, must have at least VND3 trillion ($157.8 million) in chartered capital by the end of 2010.

Of these, ANZ Vietnam reportedly completed its chartered capital increase, becoming the second incorporated foreign bank behind HSBC Vietnam to meet the deadline.

“There is nothing to worry about the chartered capital raising by locally incorporated foreign banks in the meantime,” said Duong Quoc Anh, director of the State Bank’s Banks Inspection and Supervision Bureau.

Other remaining incorporated banks Standard Chartered Vietnam and Shinhan Bank Vietnam are waiting for the green light to meet target.

When licenced in 2008, Standard Chartered Vietnam had chartered capital of VND1 trillion. Its peer, South Korea’s Shinhan Bank Vietnam, had a chartered capital of VND1.6 trillion ($84.2 million) in its licence received in 2008, while HSBC had chartered capital of VND3 trillion at the time it received its licence in the same year.

Among the five licenced locally incorporated foreign banks in Vietnam, Shinhan Bank is still preparing to open its head offices in Ho Chi Minh City, Hanoi or possibly Dong Nai this year. Hong Leong Bank Vietnam launched its ATM card and services in May, marking a milestone in its first year of business in Vietnam and plans to expand its transaction network and join in the domestic switching systems by the year’s end.

 “Five locally incorporated foreign banks in Vietnam with capital, technology, product availability and other core competence strengths will create a fiercer competition with local banks,” said State Bank governor Nguyen Van Giau.

ANZ in early March outlined a new regionally-based strategy to accelerate its progress toward becoming the leading foreign bank in the Greater Mekong region, after opening its 10th branch in Vietnam.

Decree 141 has also forced around 20 domestic banks out of a total 37 joint stock commercial banks in Vietnam to mobilise needed capital of around VND30 trillion ($1.5 billion). Among those banks short of the requirement, half have around VND1.5 trillion ($78.9 million) in chartered capital.