Two foreign banks' representative offices have licences withdrawn

16:28 | 14/04/2020
The State Bank of Vietnam (SBV) issued the decision to withdraw the licences of the representative offices of two foreign-invested banks, namely Kookmin from South Korea and Commonwealth Bank of Australia on April 8 and April 10.
two foreign banks representative offices have licences withdrawn
Representative offices of Kookmin and Commonwealth Bank of Australia had their licences withdrawn

The two banks were tasked with completing procedures to stop operations of their representative offices in Vietnam. Seven days after the decision comes into effect, Kookmin and Commonwealth Bank of Australia will have to publish information about the SBV’s decision in three consecutive publications of a daily printed newspaper or on an online newspaper for seven working days. In addition, they have to display the decision at their representative offices.

There has been no information published by the SBV to explain the revocation, however, according to the representative of the Banking Supervision Agency under the SBV, there are three potential reasons, including a proposal from these banks themselves, violations, as well as bankruptcy.

Agricultural Bank of China Limited in Hanoi is an example for the first reason. Notably, in August 2018, the SBV Governor withdrew its licence following the bank's request. The reason was that the bank had already established a branch in Hanoi, making its representative office unnecessary.

Many foreign banks in Vietnam have been pumping more capital to expand their footprint and increase their share in the domestic market, especially in the retail banking sector.

Notably, Standard Chartered Vietnam in February 2019 completed its plan to raise charter capital from VND3.08 trillion ($133.9 million) to VND4.2 trillion ($182.6 million).

Earlier, Woori Bank Vietnam, a subsidiary of South Korea’s Woori Bank, also increased its capital by 53 per cent to VND4.6 trillion ($200 million).

NongHuyp Bank's Hanoi branch also raised capital from $35 million to $80 million after getting the nod from the SBV in 2018. In addition, Bank of China (Hong Kong) Limited received the permission of the SBV to increase its charter capital from $80 million to $100 million.

Another three banks, including Bank of China (Ho Chi Minh City branch), Industrial Bank of Korea (Hanoi branch), and Siam Commercial Bank Public Company Limited (Ho Chi Minh City branch), implemented capital hikes after getting approval from the Vietnamese central bank.

The market also saw a series of foreign banks enlarge their branch networks. Shinhan Bank, for example, opened three new branches and three new transaction offices in Ho Chi Minh City, Danang, Hanoi, Haiphong, Ha Nam and Binh Duong, beefing up its Vietnamese branch anh transaction office network to 36, whilst Malaysia's Public Bank Vietnam Ltd. also expanded its foothold by opening five more branches and transaction offices, raising the total to 18 outlets.

By Ha Vy

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