Last update 3/12/2012 10:14:00 AM (GMT+7)

Vietnamese banks of regional stature – who are they?

VietNamNet Bridge – The plan to restructuring credit institutions in 2011-2015, which has been approved by the government, shows a noteworthy point: Vietnam strives to have one or two banks of regional stature by 2015.

A question has been raised that which banks would be fostered to become the banks of regional stature. A lot of names could be the “candidates” for the titles.

Analysts say that in principle, the banks of regional stature must come from the first-group commercial banks in accordance with the State Bank’s classification. These are considered the best banks in Vietnam, which have been granted the highest quotas for the credit growth rate in 2012.

The names of the first group banks have been clarified. There are 14 banks in the group, while most of them have shown their strong commitments to become the leading banks in Vietnam and in the region.

President of the Bank for Investment and Development of Vietnam (BIDV) Tran Bac Ha has affirmed that by 2020, the bank would become one of the 20 top banks in South East Asia.

Prior to that, a representative of Asia Commercial Bank (ACB) expressed the bank’s plan to become one of the five leading banks in Vietnam by 2015. The other four would be Agribank, VietinBank and Vietcombank.

A lot of banks have announced their plan to become “leading banks”. Therefore, analysts have commented that the race for the Number 1 position would be very dramatic in the next three or four years.

Keith Pogson, a senior executive of Ernst & Young Asia Pacific, has noted that in order to have a healthy banking system, every country needs 3-5 big banks which can serve as the pillars in the national economy. Meanwhile, there are too many small banks in Vietnam, and no bank deserves to become the leading bank.

Of the first-group banks, BIDV, Vietcombank, Agribank and VietinBank are considered as the banks which have the capability to lead the market. Meanwhile, foreign banks namely ANZ, HSBC and Standard Chartered Bank are also considered potential candidates.

As the leading bank has not been identified yet, the opportunities would be divided to all of the banks.

However, some analysts have affirmed that in the next five years, foreign banks are not likely to become the leading banks. General Director of a foreign bank said on Dau tu that from now to 2025, 90 percent of the market share would still be held by domestic banks. With the current difficulties, foreign parent groups would not venture to increase capital of their subsidiaries in Vietnam and expand services to compete with Vietnamese banks.

Joint stock banks have been developing well in the last five years, and they are capable to become leading banks. However, the analysts said in short term, from now to 2015, the Number 1 position would be occupied by a state owned bank.

The plan on restructuring credit institutions in 2011-2015, which has been approved by the government, also said that state owned banks would continue holding the most important positions in the banking system.

As such, VietinBank, BIDV and Vietcombank are the short-listed names. These are the three “big guys” in the banking system, in terms of total assets, outstanding loans and mobilized capital. The three banks are among the top five banks which had the highest incomes in 2009-2010, in accordance with a report released in early 2012.

Regarding the scale of business, a bank of the regional stature needs to have the total assets of 50 billion dollars on average. Meanwhile, Agribank, the biggest bank now in Vietnam only has the total assets of 25 billion dollars. This means that Vietnamese banks would have many things to do to become the banks of regional stature.

In related news, Governor of the State Bank Nguyen Van Binh said there are 9 weak banks.

C. V