Vietnam Banks Expand Network to Avoid Stricter Rules
Local banks are trying to broaden network to improve competitiveness and expand retail banking market share on anticipation that the State Bank of Vietnam will soon tighten rule on opening of new bank branches.
SBV is mulling to revise the Decision No. 13/2008, hindering local lenders from massively opening branches and transaction offices in cities and provinces besides Hanoi and Ho Chi Minh City.
The SBV later last year decided to stop granting permission for new transaction offices and branches in these two cities in 2010 as too many banks had raced to expand network there.
One general director of a small joint-stock bank admitted that corporate governance and technologies cannot catch up with the network boom, which has made banks face many risks.
He believes the biggest risks for expansion-minded banks are staff qualifications and network management capability.
A financial expert in HCM City also expressed concern that overly-rapid expansion may lead to too many banks in the same areas, forcing them to compete fiercely by raising interest rates to lure customers.
This will thus hinder the plan to gradually ease interest rates initiated by the Government, the expert said.
Vietnam currently has 41 partly-privatized and joint stock banks; three state-owned banks; one bank for social policies; one for development; five wholly foreign-owned banks; seven join venture banks and about 47 foreign bank offices.
Up to 276 commercial banks and branches are operating in Hanoi. (Labor)
Vietnamese
