South Korean banks are expanding their operations in Vietnam, thanks to the country's growth potential and its plan to loosen foreign ownership limits, Nikkei Asian Review reported.
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The SBV, which owns a 95.28% share of BIDV - Vietnam’s second-largest state-owned bank by assets, "proposed to sell" the stake to KEB Hana, said the source, who requested anonymity.
In January, Vietnam's Deputy Prime Minister Vuong Dinh Hue invited KEB Hana to participate in reforming the country's banking sector.
"The Vietnamese government takes 2018 as a year of banking reform escalation, creating chances for financial institutions such as KEB Hana to invest in the finance sector," Hue told Hana Financial Group Chairman Kim Jung-tai at a meeting in Hanoi.
Shinhan Bank, a commercial banking unit under Seoul-based Shinhan Financial Group, recently surpassed HSBC to become the No.1 foreign bank in Vietnam with US$3.3 billion in assets and 900,000 customers.
Shinhan's acquisition of ANZ Vietnam's retail unit last year helped to boost the South Korean bank's position, bringing in the Australian bank's 95,000 credit card customers.
Analysts say Vietnam's growth potential and deregulation plans make it an attractive market for South Korean banks.
"Vietnam is the most desirable market among emerging countries," said Seo Young-soo, an analyst at Kiwoom Securities.
"It has more advanced urbanization, and its market is more concentrated compared to Indonesia. Its government-driven economic development model is also familiar to South Korean banks, which have grown under the same strategy," Seo told Nikkei.
Total assets held by South Korean banks in Vietnam increased 18.9% in 2017 to $5.7 billion, according to the Financial Supervisory Service, a regulator based in Seoul.
The ratio is higher than that of foreign lenders overall, whose combined total assets increased 12.9% to US$42 billion during the same period.
Shinhan Vietnam, a subsidiary of Shinhan Bank, accounts for 59.7% of those assets, followed by Woori Bank affiliate Woori Vietnam with 15.5%. Industrial Bank of Korea, KEB Hana and KB Kookmin Bank share the rest.
South Korean lenders' combined net profit in Vietnam also jumped 28.9% last year to US$61 million. Its profits from interests soared 25.6% in 2017 to US$135 million.
More opportunities are expected for financial groups from South Korea and elsewhere as the Vietnamese government plans to loosen regulations on foreign ownership in local banks. Prime Minister Nguyen Xuan Phuc has said that Vietnam is working to ease the foreign ownership limit to attract overseas capital.
Vietnam currently caps foreign ownership in banking at 30%, with any single foreign investor restricted to 20%.
