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TOO MANY BANKS IN VIETNAM

Vietnam is a Southeast Asian country with approximately 90 million populations while a third of the country's people using banking service, while it is estimated that only of 15% of Vietnamese have a bank account, said by an expert.    


According to Mr. Nguyen Tri Hieu who set up the very first bank in U.S, said Vietnam only needs about 30 joint-stock banks operating through the country along with the SBV. That there are so many banks in Vietnam leads to the unbalance between supply and demand in the banking market. As a consequence, some weak banks will have to face various difficulties in expanding the market share, slow growth of loan volumes and so on. Moreover, Vietnam’s banks also suffer from low public confidence, regulatory and managerial weakness.

The structure of Vietnamese banking system is quite complicated. Since 1992, Vietnam’s banking system has consisted of a combination of state-owned, joint-stock, joint-venture, and foreign banks, but the state-owned commercial banks predominate. According to Wikipedia, top five domestic banks by registered capital are as follow: VietinBank $1.56 billion, Agribank $1.39 billion, Vietcombank $1.10 billion, BIDV $1.10 billion, Eximbank $0.59 billion. In September of 2005, Vietnam decided to equitize all five state-owned banks. Based on the Vietnamese Banking Survey conducted by KPMG limited company as at 31 December 2012, there were about 33 banks with hundreds of branches in all over the country. The survey also pointed that more than half of banks surveyed expect to increase in headcount in 2013 due to the opening of new branches which have been licensed from last year. 

In the first half of 2015, the Vietnamese banking sector has undergone a bout of mergers and acquisitions which may pose both opportunities and challenges for Vietnamese banks. However, despite the explosion in the number of banks across the country, quality still remains a going concern in the context of the present competitive banking market. 

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