Word: vietnamize
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...Multinational bankers are upbeat about their prospects because there is plenty of low-hanging fruit in this woefully underdeveloped market. Vietnam, which is modernizing parts of its communist economy through China-style free-market reforms, has no credit bureau and only a rudimentary system of deposit insurance. Consumer lending is nearly nonexistent. Banking has been dominated by five state-owned institutions-including the largest, the Agriculture and Rural Development Bank (Agribank)-which traditionally focused on financing large, government-owned factories and other enterprises. The country's burgeoning private businesses were virtually ignored. Because of these factors, "You have a pent...
...Indeed, deposits are currently growing at rates unheard of in more mature economies. Out of a total of 7 million bank accounts held by Vietnamese, 6 million were opened in just the past two years. Up to now, the biggest beneficiaries have been Vietnam's 34 small private banks such as Sacombank that, unlike the state-owned banks, are relatively unburdened by government directives aimed at managing the economy. Catering to individual depositors and small-business borrowers, private lenders have powered much of the industry's recent growth. Among their target customers are people like Nguyen Thi Tuyet. Four years...
...clear field Vietnam's private banks have enjoyed will disappear with the entry of foreign financial giants, which bring lending expertise and deep pockets that are impossible for their in-country rivals to match. Vietnam's largest private bank, Asia Commercial Bank, has total assets of just $2.8 billion, compared with Agribank's $14.6 billion. To compete, private banks are aggressively raising capital by selling shares to Vietnamese and foreign investors. For example, Ho Chi Minh City-based Eastern Asia Bank has built up a $1.35 billion war chest, according to its CEO, Tran Phuong Binh. The bank plans...
...sell stakes in your bank to foreigners, so you can tap their capital and expertise. "With foreign partners, we can think 'O.K., you are the competition, but we are friends, so let's share experience,'" says Trung of Sacombank, which has three foreign partners, including ANZ, holding 10% each. (Vietnam limits foreign ownership of local banks to 30%.) Such local matches are a typical developing-market entry strategy for multinational institutions, which are keen to share their superior technology and know-how in evaluating lending risks in exchange for local knowledge and existing national networks. ANZ is working...
...While foreign banks gear up and local private banks seek partners, Vietnam's state-run banks are also adapting. Four are set to be partially privatized this year and will list on the stock exchange, beginning with Vietcombank in a few months, according to Le Duc Thuy, governor of the State Bank of Vietnam, the country's central bank. State-owned players are getting additional help from the government: in April, Hanoi plans to raise charter-capital requirements for banks from $5 million to $70 million. The move is being made to ensure banks are financially sound, but in effect...