Vietnam Approves First Wholly Foreign-Owned Banks

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Sept. 11 – Vietnam has approved the licenses for HSBC Holdings Plc. and Standard Chartered Plc. to enter the country's financial market.

Prior to this, foreign banks were limited to investing in minority stakes in Vietnamese banks.The banks were approved as wholly-owned units and will be given a year to establish operations in the country.

The Vietnam banking sector is still in its infancy with only 10 percent of 86.5 million Vietnamese opening bank accounts. Local incorporation will allow foreign banks to grow their distriution network and attract more clients.

HSBC, which arrived in Vietnam in 1870, said it would build its headquarters in Ho Chi Minh City.

“We aim to start operating through our new local entity as early as possible,” HSBC’s local CEO Thomas Tobin told Thanh Nien News. The bank wants to be the first foreign bank to operate a fully-owned local bank in the fast-growing Vietnamese banking sector, he added.

According to Thanh Nien News, Standard Chartered expects the move to expand bank services and competition for consumers and companies raising funds.

The two UK-based banks are among the 40 foreign banks operating in the country and make up for a total of 14 percent of lending market.

HSBC Bank Vietnam will have a registered capital of US$182 million, while Standard Chartered’s Hanoi-based bank will have a capital base of $61 million, reports the State Bank of Vietnam.