Features

Mr David Fried

How important is Asia among HSBC’s strategic markets and what is your firm’s strategy in Vietnam’s emerging insurance market?

We have divided markets in Asia into two groups. The first one is Hong Kong and Singapore and the second one is China, India, Taiwan and Vietnam. In fact, Hong Kong and Singapore are the most developed markets and we presented there for years. Emerging markets such as Vietnam, Thailand and Indonesia will have our different investments depending on the regional plan in every period.

The global business last year brought about a $2.5 billion profit from insurance, of which 49 per cent or more than $1.2 billion came from Asia. Emerging markets made up $500 million. What we see is that there is significance from the under-developed markets. Some Asian markets at the same time are at the development level. We look at the dynamic markets such as Vietnam, at what opportunities we see and how to find the best way to succeed in and what will be the opportunities to develop the insurance industry in here.

Looking at the Vietnam market, we see there is significant amount of growth for life insurance. That is the way to come into the market. In fact, the foreign insurance has not been able to penetrate the market.

Fortunately, we have a great backup from HSBC branches. Therefore, when re-entering the market I think we find out the significant way to reach the insurance market in Vietnam already.

To improve the life insurance profit, we built up the relationship with Bao Viet Holdings for a 10 per cent stake in the firm in 2007 and then moving forward to 18 per cent in January of this year. In the future, our strategy is commitment to developing the insurance in Vietnam as well as the connection with Bao Viet Holdings.

How do you evaluate the efficiency of the Bao Viet Holdings investment and does HSBC have any plans to invest more with this local partner?

When Bao Viet Holdings achieved a $55 million profit last year, we could have got a dividend from our 10 per cent stake in the firm. However, our commitment here is long term. Investing in Bao Viet is not just for profit but to help it offer better services to community and customers.

We found many good people working in Bao Viet. I believe that it is in the aimed system of key people whose abilities meet the requirement to manage the firm. Moreover, we will help them with experience and investment in the next two years to upgrade the management and investment efficiency of the Bao Viet Holdings.

Currently, Bao Viet Holdings is entering into a life insurance technology transformation programme. We are having an on-going conversation with Bao Viet Holdings and the Ministry of Finance (MoF) for the right to take over up to 25 per cent as in the signed commitment before. But it also depends on the time when the MoF and Bao Viet Holdings see a demand and feel the right time for us to be able to invest further more.

What are your comments on Vietnam’s insurance market in the next five years?

The fact is that Vietnam’s insurance has now contributed just 2 per cent of gross domestic product (GDP) compared with 5 per cent in India and 3.5 per cent in China.

It means there is still huge room for us in Vietnam and I think any life insurance company will help expand the market and bring more choices to customers. One more thing is that we see another significant chance for bancassurance which are connection products between Bao Viet Holdings’ insurance products and HSBC banks in the future.

I see that Vietnam’s insurance industry should be one of the fastest growth industries in the world. As the general graphic on the high saving rate of Asian population shows, we see that insurance products should have a role in the short term and long term here.

I believe this trend will continue since the introduction of the universal insurance life product in this market. It would last 18 months, and I think you will see the growth of investment and saving and retirement insurance products for individuals.