As commercial banks see large profits and banking shares gain in value, experts warn that local banks may not have adequate human resources to handle the new capital.

Banking personnel are seeing rapid promotions, as bank branches have mushroomed over the last two years. With the expansion of the banking network, the branches have suffered from a shortage in management staff, both in terms of quantity and quality.

According Nguyen Duc Vinh, general director of Technological Commercial Bank (Techcombank), the lack of human resources was now more dire than the lack of capital.

Bank share issues were receiving a warm welcome in the market, so raising capital had become less difficult. The problem was how to recruit sufficient staff to deal with the capital efficiently, Vinh said.

Vinh said the lack of human capital was affecting both the management and risk appraisal qualities of the bank, to such a degree that banks were trying to lure personnel from each other.

According to Le Dao Nguyen, deputy director of the Bank for Investment and Development of Vietnam (BIDV), weak financial capacity, poor management and a lack of specific strategies were among the most critical bank problems.

Vinh affirmed that Vietnam was seeing both a surplus and a shortage of banks. "There are a good number of local banks, and their strategy is retail, targeting a population of 80mil," he said, adding that Vietnam's banking services were still behind those of other regional countries, like Thailand or Singapore.

Though there were around 40 domestic banks, in addition to 30 joint venture banks and foreign bank branches, domestic banks failed to offer a diversified range of services, he said.

Capital was another factor limiting banks' ability to improve their technologies and services. According to Huynh Nam Dung, chairman of Mekong Housing Development Bank (MHB), even State-owned banks were still small compared to medium banks in the region. BIDV, for example, has only around US$300mil in capital.

So far, MHB and Vietcombank are the only two State-owned commercial banks that have approval to equitise and attract capital from the public. Dung said that once a bank was equitised, it could work with foreign banks as strategic stakeholders, allowing the bank to increase its capital while the foreign partners would help enhance the quality of management, particularly risk management.

Source: Viet Nam News