World Trade Organization (WTO) accession will bring Vietnam either advantages or difficulties in such sensitive economic sectors as banking and finance. Huynh Buu Quang at Global Payments and Cash Management of Hong Kong and Shanghai Banking Corporation in Vietnam (HSBC Vietnam) shared his opinions about one of these difficulties.
More foreign banks are rushing to invest in Vietnam these days. Is this trend due to their expectation over this lucrative sector when Vietnam becomes an official member of the WTO, or due to its existing attraction?
According to Standard & Poor’s, Vietnam is considered one of the most attractive markets in the world, with its remarkably improved financial credit rating. This in part encourages more foreign credit organizations to join the market. Apart from the presence of well-known names in the sector, some newcomers like GE Money have already opened representative office in Vietnam.
Large foreign banks have actively prepared ground for their further development here through buying shares of local commercial banks. The HSBC, for example, acquired a 10% stake in Vietnam’s Technological and Commercial Bank (Techcombank). Also, joint-venture banks are opening their new branches.
In its accession to the WTO, Vietnam will be asked to open its market to foreign creditors. Is this a threat?
As a WTO member, Vietnam will have to further open its banking and finance market, allowing foreign banks to establish more new branches, expand their range of customers… Although local banks then will be put under competition pressure, this will create incentives for them to improve their operation for increased competitiveness.
As an expert in banking and finance, what are challenges for Vietnam’s banking system do you think?
That’s human resources for management at local banks in a fair competition with foreign credit institutions. In my opinion, local banks are lack of high professional management. Moreover, internal control scheme needs improving.
The next challenge lies in low capital and backward technology. At present, only some local banks have capital of over US$100mil and some are equipped with core banking system. Those with modest capital and out-of-date technology will face various difficulties and be at risk of losing their customers. On that ground, merger and acquisition trend is inevitable.

Source: Lao Động