Thai banks rush for booming Vietnamese market

Thailand's third largest bank by assets Siam Commercial Bank (SCB) officially launched its Ho Chi Minh City branch earlier this month, after receiving a foreign banking licence from Vietnamese authorities last year. The bank had previously been operating in the country through a joint-venture with Vinasiam Bank for 22 years.

General director of SCB Ho Chi Minh City, Saraya Skontanarak, told the Bangkok Post that the bank was in the process of increasing its registered capital from $25 million to $70 million, which it expects to complete this month. After the recapitalisation, it hopes to support aggressive business expansion in line with Vietnam's economic growth.

According to the chairman of the executive committee, Vichit Surapongchai, the branch will mainly serve Thai and Vietnamese corporate customers in trade and investment. Vichit added that the branch is aiming to provide 25 per cent of the loans taken up by Thai businesses investing in Vietnam by 2018, along with a 10 per cent share of the Vietnamese-Thai trade volume by 2020.

Apart from the country’s solid economic growth, a flood of Thai investors expanding here is one reason SCB was ready to expand its business in Vietnam, Vichit said, adding that there are several Thai conglomerates with a foothold in Vietnam, including CP Group, Siam Cement Group (SCG), TCC Group, Central Group, Amata, and Red Bull.

Anand Panyarachun, chairman of SCB's board of directors, said that the branch is going to enter retail banking as the next step, after catering for its wholesale customers first.

Meanwhile, Bangkok Bank, Thailand’s largest lender by assets, has recently more than tripled the registered capital of its Vietnamese branch and is targeting a loan growth of 18 per cent this year in the country.

Multinational customers represent the largest portion of the Vietnamese branch’s loan portfolio with 50 per cent of its total outstanding loans, followed by 40 per cent Thai and 10 per cent local customers. Most recently, Thai conglomerate Central Group has completed the €1 billion ($1.12 billion) acquisition of Big C Vietnam, taking up a bridge loan from Bangkok Bank to fund the deal.

Thailand’s FDI in Vietnam was $14.5 billion in 2015, up 16 per cent on-year. Thailand is Vietnam’s biggest trade partner in the ASEAN, with bilateral trade reaching $11.45 billion last year, slightly down from 2014’s $11.62 billion.