Cautious approach for foreign banks

“In the past five to seven years foreign banks have lured in good performers in local business community, not only private but also state-owned entities. Their top priority is to ensure sustainable development,” said Phan Thanh Tuyen, a financial and banking expert.

Tuyen also commented that foreign banks would not rush into expanding operational networks but focus on network safety and ensuring sustained growth in the coming period.

“Citibank currently takes the lead in servicing foreign invested businesses and big companies. We held maintaining the top position in this market segment as our prime target in the coming period, together with expanding our investment supportive solutions and helping Vietnamese companies to break potential foreign markets,” said Citibank Vietnam’s managing director Brett Krause.

Under Vietnam’s commitments to the World Trade Organization (WTO), the country will be entirely open to foreign players in the banking sector from 2011. However, foreign banks are taking cautious development steps and making security a top priority.

Besides foreign invested enterprises and import-export businesses, foreign banks are setting their eyes on Vietnamese small- and medium-sized companies as well as medium- and high-income individuals.

“Last year, we expanded retail banking services in Ho Chi Minh City with our premier Citigold package,” said Citibank Vietnam’s Brett Krause, adding that the bank had opened a retail section in Hanoi and was moving forward with diverse credit services such as credit cards, consumer loans, secured loans and a series of other services catered to the needs of Vietnamese individuals.

Foreign banks’ network expansion plans were taken with prudent steps unlike their local counterparts according to deputy chairman of the National Financial Supervisory Commission, Dr. Le Xuan Nghia who claimed a number of local banks, both big and small, had opened branch offices everywhere, including areas with little potential for raising deposits to vie with each other, leading to costly operational expenses.

Vietnam now accommodates over 70 foreign credit institutions, including five wholly foreign-owned banks. Foreign banks currently hold 10 per cent of the market share.