Changing business strategyANZ sold its retail banking to Shinhan, Standard Chartered Bank planned to withdraw from ACB, Dragon Financial Holdings Limited sold its ACB shares, HSBC withdrew from Techcombank and Vietnamese VIB bank took over 20% of Commonwealth Bank of Australia (CBA), those sales are raising concern over the investment environment in Vietnam.
Operation at VIB – Long Bien Branch.
|
"ANZ's retail baking sale to Shinhan should not be included in the unconfirmed trend because the buyer is another foreign bank. If having a pessimistic view on the Vietnamese banking system, why Shinhan bought part of ANZ? "- banking expert Phan Minh Ngoc questioned.
Break-up aftermath
Big investors always have reason for investments, whether they are for profits, forstrengthening their images or for entering new market. With this being said, fund withdrawal happens when their objectives are attained, or in other case, unattainable.
In case of HSBV and Techcombank, the break-up is unavoidable for many reasons. HSBC has set up a local bank in Vietnam with 100% ownership. 12 years is long enough for HSBC to create a strong brand positioning, expand its market and transaction network. This is convincing enough for HSBC to withdraw capital despite a strong growing Techcombank with profit of thousands of billion VND annually.
Similarly, capital withdrawals of Standard Chartered Bank capital from ACB is part of the bank’s strategy 2 years ago, while Dragon Financial Holding Limited sold its stock to comply with regulation on the maximum amount stock a foreign investor can own in ACB.
With regard to CBA withdrawing capital from VIB, as announced by the VIB board of directors, CBA wanted to focus on its investment rather than to spread it in various fields. According to General Director of ANZ Vietnam, Dennis Hussey, the decision to sell its retail business in Vietnam is part of a broader retreat from Asia retail banking.
Withdrawing decision of foreign partners in the financial sector has been going on for the last 3 years and not just at the moment. On November 2013, Chinese Banking Corporation Limited (OCBC) has sold the whole 85.8 million stakes, equivalent to 14.88% capital at VPBank. HSBC also sold 18% stakes at Bao Viet Holdings to Japanese Sumitomo Life in 2012 after 5 years of investment. In the current context, capital withdrawal can be seen as a new beginning from a different perspective, in which everyone has its own strategy of development. It can be part of a restructuring process, or refocusing on a certain market or fields, or just to avoid conflict of interest with its own branch operating in the same market.
Major credit rating agencies such as Moody’s, Standard & Poor, Fitch say the outlook for Vietnamese banks is stable. At present, Vietnam has 8 banks with 100% foreign capital.
The capital withdrawal process does not have a significant impact on the operation of Vietnamese banks due to the stock restriction of foreign investmetat 30%, meaning they do not have a say on any major decision of the bank. However, this can prolong the banks’ plan on raising capital. This in turn would require the banking system to change and reform its operation mechanism toward flexibility and professionalism. – Lawyer Truong Thanh Duc.
