Korean Investors Poured Capital into Vietnam Banks

Japan-Vietnam economic cooperation will form a new value chain

From the beginning of this year, financial investors from Korea have actively sought opportunities to enter Vietnam banking market, especially the consumer finance segment. One typical example is the Lotte Card is negotiating to acquire Techcom Finance.

Recently, Techcombank has approved the contract and transaction documents related to the sale of 100% stake in Techcom Finance. The partner who is negotiating to buy back is Lotte Card – a subsidiary of the Lotte Group. If the deal is approved, Lotte Card will be the first Korean card company presenting in Vietnam, offering installment loan services, consumer credit cards…

Currently, consumer lending is an attractive market, bringing the profit of tens billion VND for financial companies in Vietnam market, of which FE Credit is outstanding. However, according to VP Bank’s General Director – the bank owns FE Credit, consumer lending has been saturated, lending cash despite good growth, but lending through cards is trend of the future. This is the direction that FE Credit is promoting.

According to the State Bank of Vietnam (SBV), although transaction through card is still modest, the trend to spend using credit card has been increasing sharply, especially in the context that the Government is promoting the non-cash payment scheme.

Lotte Card entered the Vietnam card market this time is very timely. Not to mention, the company also has the support of the customer force of the Lotte Group, which has rooted in Vietnam for more than 10 years. According to a bank expert, with the potential of Korean investors, Lotte Card will soon expand its operations in Vietnam.

Not only Lotte Card but many financial investors from Korea are continuing to seek opportunities in the financial market of Vietnam. From the beginning of the year, 3 Korean banks have cooperated with banks and insurance companies in the country.

Specifically, in July 2017, Daegu Bank signed a comprehensive cooperation with OCB. Prior to that, the Korea Development Bank (KDB) signed a comprehensive cooperation agreement with BIDV, while Woori Bank Vietnam signed a cooperation agreement with the Post Insurance Corporation (PTI).

Currently in Vietnam, there are two banks with 100% Korean capital (among 8 banks with 100% foreign capital), which are Shinhan Bank and Woori Bank. In addition, many other large banks in Korea have established branches and representative offices in Vietnam, such as KEB Hana, Industrial Bank of Korea, Kookmin, Busan, Nonghyup, Agricultural Bank of Korea. Korean banks are ranked number one among foreign investors present in the banking market of Vietnam.

With good service, low interest rates, favorable lending conditions, banks and finance companies from Korea such as Shinhan, Woori, coming here is Lotte Card… will also threaten the retail market share of many domestic banks. Even with corporate lending, if there is no reform measure, the large banks in the country will also let customers fall into the hands of the Korean banks. Not long ago, leaders of Keximbank Korea have expressed their intention to provide credit for the metro lines in Ho Chi Minh City, especially the 4b-1 metro line to Tan Son Nhat International Airport.

The wave of investment from Korea to the financial sector of Vietnam has not showing signs to stop. The experts warn that domestic banks need to strengthen the “defensive” capabilities. With the advantages of cheap capital, modern technology, understand the Vietnam market, strong customer force…, surely Korean banks will be formidable opponents of Vietnamese banks.