Korean banks are increasing their presence in Vietnam, betting on the growth potential of the emerging market, especially when and if limits on foreign ownership ratio are removed.

VietinBank Insurance (VBI), a subsidiary of VietinBank, late last week signed a share transfer contract with Hyundai Marine & Fire Insurance Company Limited (HMFI),which committed to buy 25 percent of VBI’s charter capital. 

After issuing the additional amount of 16.6 million shares, VBI’s charter capital will rise to VND666.6 billion.

Also at the event, VietinBank, which holds the controlling stake in VBI, signed a strategic cooperation agreement with HMFI.

A representative of VBI said with the cooperation deal VBI will have advantages from its relations with HMFI to develop South Korean partners and clients in Vietnam.

Korean banks are increasing their presence in Vietnam, betting on the growth potential of the emerging market, especially when and if limits on foreign ownership ratio are removed.

+ HMFI is known as a big insurer in South Korea, the second biggest life insurer in the country.

+ BIDV and KEB Hana Bank, which has the second largest total assets in South Korea, are also expected to complete a deal. 

BIDV last October finished consultations with shareholders on the sale of 17.65 percent of shares to KEB Hana Bank, or 15 percent of shares after the bank’s charter capital increases to VND40.22 trillion, thanks to the issuance of 603 million shares.

Some Korean firms have invested in Vietnam by buying into Vietnamese companies, while others have joined the market to compete directly with local institutions.

Lotte Finance on December 18 officially joined the consumer lending market after it spent VND1.7 trillion to take over TechcomFinance last March. 

To date, Vietnam has licensed two wholly South Korean owned commercial banks – Shinhan Bank and Woori Bank. Both of them have received additional investment capital and expanded networks.

In September, Woori Bank got the nod from the State Bank on raising its charter capital from VND3 trillion to VND4.6 trillion. It also got approval to open five branches and one transaction point in Vietnam.

Meanwhile, the presence of Shinhan Bank in the domestic credit card market became stronger after the bank wrapped up the deal to acquire the retail division of ANZ Bank in late 2017. The bank has also opened four more branches in Vietnam to raise the total number of transaction points to 30.

Kookmin, another South Korean finance group, is planning to scale up its operation in Vietnam. At a meeting with Deputy PM Vuong Dinh Hue in early September, the representative of the bank said the bank is following procedures to open its Hanoi branch.