South Korean bank is reported on the verge of gaining approval to open a 100 per cent foreign-owned bank.
South Korea’s Woori Bank has applied to set up shop in Vietnam sometime this year, Reuters reported on June 20.
The largest South Korean bank in terms of consolidated assets according to first quarter of 2016 figures, Woori Bank is waiting for final approval from the State Bank of Vietnam (SBV) to become a wholly foreign-owned bank in the country.
Sources close to the central bank confirmed the Reuters report with VET but no SBV leaders were willing to give confirmation at this time. Woori Bank currently has branches in both Hanoi and Ho Chi Minh City.
South Korea is the largest foreign investor in Vietnam with substantial investments coming from giants such as Samsung Electronics and LG Electronics. Vietnam aims to become a Southeast Asian production hub for South Korean conglomerates.
Other major South Korean companies in Vietnam include Kumho Construction, Posco, Hanjin Logistics, and Kumho Tire.
South Korea and Vietnam have major potential to further promote their relationship and economic ties when the Vietnam-Korea Free Trade Agreement (VKFTA), signed last year, comes into effect.
As at May this year South Korea had 5,273 projects with total registered capital of $49 billion in Vietnam, ranking it No. 1 out of 115 countries and territories. The average scale of each project is about $9.3 million, according to figures from the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI).
Two-way trade was reported at $34.4 billion in 2015, a 29 per cent increase year-on-year. As at the end of April trade was $12.7 billion this year, 13 per cent higher year-on-year.
There are also wide-ranging people exchanges between two countries. More than 1 million Vietnamese people are employed by South Korean enterprises and 130,000 South Koreans are living and working in Vietnam.
Once licensed, Woori Bank’s Vietnam concern will be the second South Korean bank in the country and it is expected to provide support and encourage even more South Korean companies to expand their operations.
The other 100 per cent foreign-owned banks in Vietnam are HSBC, ANZ, Standard Chartered Bank, Hong Leong Bank, Shinhan Bank and Public Bank Perhad (PBB).
With approval expected, Woori Bank will strive to strengthen its localized services to retail customers through channels such as its mobile banking platform Wibee Bank and its chat app Wibee Talk.
HSBC was the first foreign bank to gain approval from the SBV to set up a wholly foreign-owned bank in Vietnam, in September 2008. Malaysia’s Hong Leong Bank was the first from Southeast Asia to gain approval from the SBV, in December 2008.
Standard Chartered Bank, Shinhan Bank and ANZ all received approval from the SBV in 2009. Malaysia’s Public Bank Perhad (PBB) is the newest foreign bank to gain approval, in March this year.
Vietnam now has 50 branches of foreign banks, 50 representative offices, 16 foreign non-bank credit financial institutions, and four joint venture banks, according to the SBV.