Caro café, which is located on both Nguyen Cong Tru and Pho Duc Chinh streets in HCM City has been shut down and replaced by a transaction point of Vina-Siam Bank. People are curious about the leasing fee of the premisise, which is located in a very advantageous position. “Caro café had to pay $1,800 a month, and the leasing fee the bank pays must not be less than $2,000,” a real estate broker guessed.

Ben Chuong Duong in HCM City is the road where many banks want to locate offices on, as it is considered a financial centre of the city. The State Bank of Vietnam, State Treasury, state owned banks and HCM City Securities Trading Centre (HSTC) are all located on that road. However, it is not so easy to land on there. Commercial banks have many times negotiated with the Vietnam Textile and Garment Corporation (Vinatex) which owns the land on the land use right transfer, but the negotiations all failed.

Nguyen Thanh Toai, Deputy Director General of the Asia Commercial Bank (ACB), once stressed that the three most important things for setting up a branch are “location, location, and location”. The most ideal position is the one located on densely populated residential quarter, two-way road. The office needs to have the width of 6-8m and length of 20m. However, it is very difficult to meet all the requirements. Tran Phuong Binh, Director General of East Asia Bank (EAB), once said when relocating EAB’s head office on Phan Dang Luu road in Phu Nhuan district: “Everything is okay, but it is regrettable that Phan Dang Luu is a one way road”.

Nguyen Quang Trung, Deputy Director General of Sacombank said that land owners now all require the 15-20% increase in leasing fees for the offices you have been leasing. If you want to pay a completely new premise, you will have to pay 50% more. Tran Hung Dao A, Tran Hung Dao B, Le Loi, Ham Nghi, and the “Wall street” (Ben Chuong Duong) are the most ideal places for banks in the southern commercial hub.

Commercial banks nowadays all try to expand as many branches as possible, considering this a vital issue of the banks.

In 2006, Sacombank had 156 transaction points, being the bank with the largest transaction network among joint stock banks. Sacombank plans to raise the total number of transaction points to 215 nationwide in 2007.

ACB said it has 100 transaction points and branches, and plans to set up eight more every year during 2008-2009.

Pham Van Thiet, Director General of Eximbank, also said that expanding the transaction network has been highlighted as the most important task of the bank.

Statistics showed that in 2006, there were 697 branches and transaction points in HCM City, 40% of which belong to state owned banks, 53.51% belong to joint stock banks and joint venture banks, while the remaining belong to foreign branches, financial companies and finance leasing companies.

Commercial banks still try to open more branches to attract more clients despite the big expenses for every branch. Under the current regulations, banks must add VND20bil ($1.25mil) more to its capital to be allowed to open one more transaction point. It is estimated that a bank must spend more than VND300mil ($18,750) a month to feed a first-class branch with 20 staff members in HCM City.

Source: VNE