The sale of business divisions can be seen as a move by foreign banks to restructure their operations and focus on core business fields to improve business efficiency.
The recent moves by foreign banks have led to big changes in the operation models. ANZ Bank has transferred the retail banking division, which once was its key business sector, to Shinhan Bank from South Korea. Prior to that, Commonwealth Bank sold its retail banking division to Vietnam’s VIB Bank.
Sources said another similar deal may wrap up in some days. Both the seller and buyer are foreign.
A banking expert said foreign banks plan based on the business environment of the host countries. Previously, foreign banks had difficulty finding their way to explore the Vietnamese market. But now they have identified the strong and weak points of the market.
|Foreign banks plan based on the business environment of the host countries. Previously, foreign banks had difficulty finding their way to explore the Vietnamese market. But now they have identified the strong and weak points of the market.|
He said that it is now easier for banks to sell their business divisions thanks to an upgraded legal framework, including the amended Law on Credit Institutions which allows merger, share transfer and capital contributions. Foreign banks have exploited this to restructure their operation.
In the case of ANZ, the sale of its retail banking division brought a huge amount of money which helped the bank target corporations and financial institutions.
An ANZ report showed that its profit decreased slightly after the sale of retail banking, but its total assets had increased by 16 percent by the end of the second quarter compared with the beginning of the year.
The biggest increases were seen in two items – deposits at the State Bank (up by VND320 billion), and deposits and loans to other credit institutions (VND4.15 trillion).
While some foreign banks plan to stop doing retail banking, other foreign banks want to step up the business field in Vietnam. These include Hong Leong Bank, Shinhan Bank, Woori Bank, CIMB Bank, UOB and Public Bank Berhard.
The banks have increased their presence with diverse services. Some banks now sell products via phones and messages. This shows that foreign banks are preparing not only to compete with each other, but also with Vietnamese banks.
Shinhan Bank is pursuing an ambitious plan to be among the top 3 banks in credit card services in the next three years.
It is not only strong in financial capability (it belongs to Shinhan Group, a powerful financial group in South Korea), but it also has advantages in retail banking. It has taken over Prudential Finance, (PVFC) at $151 million.
Woori Bank also reportedly wants to buy a retail banking division.