The State Bank of Vietnam (SBV) has agreed in principle to the establishment of four new joint stock banks (JSB) after 10 years of denials. They are FPT, Bao Viet, Lien Viet and Petroleum Bank.

Sources say the central bank is now considering the applications of five other JSBs: Power Bank, Asian Foreign Trade Bank, Star, Indochina and Thuong Tin Indochina Bank. The central bank has also received applications from 20 other potential institutions. Meanwhile, several hundred branches and transaction points are awaiting approval.

Office shortage

Five bank branches were opened in the last two months, located on the 500m-long stretch of Xo Viet Nghe Tinh road in Binh Thanh district, HCM City.

A landlord on Nguyen Cong Tru street in district 1, HCM City, which is now considered the City’s financial center, said representatives from 8 banks met him in the last three weeks to discuss leasing his house.

Analysts forecasted many new banks would be introduced in 2008, which will inevitably lead to a shortage in banking offices. Governor of the State Bank of Vietnam Nguyen Van Giau said that at least five domestic owned banks will become operational by the end of June, at the latest.

Head of a bank establishment preparation committee complained that he filed the bank establishment application at the end of 2006, but he still waiting for SBV’s approval.

“It will become very difficult for us to operate successfully if we are not licensed in the first half of 2008,” he said.

Human resource dearth

Human resources remain the biggest concern of banks nowadays. Chairman of a bank said that he can easily call for capital from shareholders, but he still cannot find a Managing Director.

Ly Xuan Hai, General Director of ACB, said that banks and financial institutions are seriously lacking qualified employees, especially new players, because senior staffers prefer working for prestigious names.

Mr. Hai said banks must now offer very competitive salaries to retain qualified staff, as recently established institutions are trying to lure Managers by offering salaries 3-4 times higher.

Competition

Kieu Huu Dung, Director of the Banks and Non-Bank Credit Institutions Department under the SBV, has warned that the competition among banks will be very hot. The competition is already fierce with five State-owned, 35 joint stock and six joint venture banks, and will be stiffer in the future, when additional players enter the market.

Under WTO commitments, Vietnam will have to allow 100% foreign owned banks to set up operations. The central bank has advised commercial banks to merge into each other to become stronger and more competitive. However, their counsel has been ignored: more and more new banks await licensing, while no merge or acquisition deal has yet been announced.

Source: Tien phong.