Vietnamese banks drawing closer to Japanese partners

Yasuhiro Sato, general director of Mizuho called Vietcombank their most successful investment

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Expanding Japanese investment in Vietnam

One of the first Japanese companies investing in the Vietnamese banking industry was Mizuho Financial Group, which entered in the domestic market in 2012. Currently, Mizuho’s initial investment of $570 million has doubled in value.

At a recent meeting with Vietcombank’s leaders, Yasuhiro Sato, general director of Mizuho, said, “Vietcombank is our most successful investment.”

Also, Sato said, after the last five years of successful partnership between Mizuho and Vietcombank in the banking industry, he hoped that the cooperation will be expanded to other fields, such as securities and financial companies, so that Vietcombank can become a strong financial group in Vietnam.

Unlike Mizuho, the $225 million of Sumitomo Mitsui Financial Group’s initial investment in Eximbank has declined in value by over a half at present, however, the Japanese company does not plan to exit the Vietnamese market.

Through its 15 per cent holding in Eximbank since 2007, Sumitomo used to have huge profits when this commercial bank earned trillions of VND.

At the meeting with Deputy Prime Minister Vuong Dinh Hue, Ryuji Nishisaki, CEO cum chairman of Sumitomo Mitsui in Asia-Pacific, said that the group was closely monitoring the restructuring process of credit institutions in Vietnam. Besides keeping an eye on Eximbank’s restructuring, Sumitomo Mitsui also expressed its willingness to join the Vietnamese derivative and bond markets.

Apart from experienced investors, such as Sumitomo Mitsui, Mizuho, and Bank of Tokyo - Mitsubishi UFJ (BTMU), plenty of Japanese banks are looking for Vietnamese partners. Recently, BIDV has sold 49 per cent of its stake in its financial leasing company to Sumitomo Mitsui Trust Bank, the largest trust bank in Japan. Previously, MB successfully called for investment from Shinsei Bank for its subsidiary Mcredit Consumer Finance Company.

At present, Japanese investors are considered the biggest partners of commercial banks in Vietnam. Most of this partnership brings success for both parties, thus, Vietnamese banks have started to develop a taste for Japanese investors. With the increasing Japanese investment wave, it is likely that these funds will find their ways into areas other than finance and banking as well.

Vietnamese banks dote on Japanese clients

Commercial banks in Vietnam are diversifying cooperation channels with Japanese banks. This is considered one way to approach potential Japanese enterprises who wish to invest in Vietnam.

Agribank has signed a cooperation agreement with Yanmar Co., Ltd., a leading agricultural machinery company in Japan. Besides Agribank and Yanmar, many contracts with the total value of $22 billion have been signed between enterprises and local authorities in the two countries during Prime Minister Nguyen Xuan Phuc's visit to Japan. This record number is expected to create a new wave of Japanese investment in the coming years.

Vietnamese banks started paying attention to Japanese customers five years ago when incoming Japanese investments surged. At the end of February 2017, BIDV signed a memorandum of understanding (MoU) on serving Japanese customers in Vietnam with Fukuoka Bank, the 16th biggest bank in Japan. Similarly, VietinBank and Vietcombank have also signed dozens of MoUs with Japanese partners. In particular, Vietcombank has signed with approximately 60 Japanese banks.

Following the trend, other commercial banks also seek Japanese partners and have even established a new service called Japan Desk to support clients form Japan. VietinBank, Vietcombank, and BIDV, Sacombank, HDBank, TPBank, and many others offer this service.

The increasing Japanese investments in Vietnam and the cultural similarities are promoting cooperation among commercial banks and companies in the two countries.