The State Bank of Viet Nam (SBV) on Tuesday approved in principle South Korean Woori Bank's plan to set up a wholly foreign owned bank in Viet Nam. — VNS Photo

HA NOI (Biz Hub) — The State Bank of Viet Nam (SBV) on Tuesday approved in principle South Korean Woori Bank's plan to set up a wholly foreign owned bank in Viet Nam.

Under Document 5829/NHNN-TTGSNH, SBV also approved a draft list of Woori Bank Viet Nam's board of members, members of the supervisory board and general director. 

For an official licence, Woori Bank was asked by the SBV to complete legal dossiers in accordance with the current regulations and  submit them to the SBV governor for approval.

Once it receives the licence to operate, Woori Bank -- South Korea's largest bank in terms of consolidated assets as of the end of March -- expects to be a vehicle that will help to expand South Korean investment in Viet Nam, where it has been limited to operating two branches.

South Korea is now the largest foreign investor in Viet Nam, with Samsung Electronics Co Ltd and LG Electronics Inc bringing large investments to turn it into a Southeast Asian production hub.

Other major Korean companies in Viet Nam are Kumho Construction, Posco group, Hanjin Logistics and Kumho Tire.

A free trade agreement between South Korea and Viet Nam that came into effect last December gives more investment incentives to Korean firms. South Korea invested US$4.2 billion in Viet Nam in the first seven months this year, accounting for 32.5 per cent of Viet Nam's total investment capital.

After receiving the official approval, Woori Bank will also seek to strengthen its localised services for Vietnamese retail customers through channels such as its mobile banking platform Wibee Bank and chat app Wibee Talk.

Viet Nam currently has six wholly foreign-owned banks. They are HSBC Viet Nam, ANZ Viet Nam, Standard Chartered Viet Nam, Hong Leong Viet Nam and Shinhan Viet Nam, besides Public Bank Berhad.

According to experts, more foreign banks are expected to enter Viet Nam's market, especially after the establishment of the ASEAN Economic Community late last year.

They recommend that Vietnamese banks must operate on a larger scale, with huge investments in technology and products through consolidations and mergers, to create better and stronger banks that can compete with foreign banks.

By 2020, in accordance with the commitment to the World Trade Organisation, Viet Nam will have to completely open its doors in the banking sector. — VNS