Thailand’s Siam Commercial Bank (SCB) will set up a wholly owned branch in Vietnam by taking over Vinasiam Bank – which is a joint venture between SCB, the Vietnam Bank for Agriculture and Rural Development (Agribank) and Thai conglomerate Charoen Pokphand Group.
“Vinasiam Bank is an utterly weak bank in operation, which cannot assure the real value of regulated capital for a commercial bank,” the State Bank of Vietnam said in a statement. “With the SCB acquiring Vinasiam Bank, a troubled lender in the local banking system will be dispatched,” it added.
Vinasiam was granted license in 1995, in which Agribank, Vietnam’s biggest bank in terms of assets, has a 34 per cent stake, while the two Thai investors hold 33 per cent each. The bank has been reporting successive losses over the past three years, registering a maximum loss of $7.14 million in 2014.
Although Vinasiam raised its charter capital to $161 million in 2011, its real value has fallen far below this figure, according to the Vietnam central bank.
SCB is not the only Thai bank that has shown interest in Vietnam. In March, Kasikorn Bank became the first Thai bank to open representative offices in the country. In addition, the Bangkok Bank has also established its branches in Vietnam.
“Vietnam, with its abundant human capital, is a vital destination to both Thai and international investors. The launch of our two offices in the country means to reinforce our customers’ flexibility in business as they want to expand into Vietnam,” Kasikorn Bank CEO Preedee Dawchai said.
A stable economic growth and increasing commercial integration has made Vietnam an attractive market to the overseas investors. In addition to opening representative offices, a number of foreign lenders are looking at acquisitions of local loss-making peers, in order to set up their 100 per cent owned branch network.
Tharabodee Serng – Adichaiwit, director of Bangkok Bank in Vietnam, had earlier revealed that the bank gained a 10 per cent growth last fiscal, which was 2.5 times higher than the growth of local competitors.
Collectively, foreign banks have more than 50 representative offices and over 50 branches in Vietnam. This is apart from the presence of five wholly owned banks – Standard Charter Bank, HSBC, Shinhan Bank Vietnam, ANZ and Hong Leong Bank.