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Vietnam Business » Vietnam Banking News » Savings banks proliferate in response to State Bank curb on branches

Savings banks proliferate in response to State Bank curb on branches

A branch director of a Hanoi-based bank commented that banks now barred from opening more full service branches are opening savings banks that they hope to upgrade into branches when there are favourable conditions.

Over the last two months, many commercial banks have been opening saving banks, a move perceived as a way to expand even though the State Bank (SBV) has tightened controls over the opening of full service branches. The savings banks only accept deposits; they do not make loans. Saigon Commercial Bank (SCB), Techcombank, Vietnam Tin Nghia and Maritime Bank have all opened savings bank subsidiaries in HCM City A savings bank only accepts deposits, delivers valuable papers for the parent bank, pays out kiều hối remittances from the overseas Vietnamese relatives of clients and wires funds. If customers want a loan, the savings bank can report the cases to the parent bank. Commercial banks see the savings bank model as a way to increase their presence in HCM City. A branch director of a Hanoi-based bank commented that banks now barred from opening more full service branches are opening savings banks that they hope to upgrade into branches when there are favourable conditions. Because savings banks it is easier to obtain permission from the watchdog agency to open them, especially in Hanoi and HCM City. An official of the HCM City Branch of the State Bank said that SBV has decided that it will not allow banks that already have many branches in Hanoi and HCM City to open more. SBV is drafting an instruction which stipulates stricter requirements on the network operations of commercial banks. To open a savings bank, commercial banks need only register its opening with the SBV branch where the savings banks are situated. Also according to the official, the requirements are easy and no limit has been set on the number of savings banks a bank can open in a city. Experts say they do not see any risks in the boom of savings bank. However, the Vietnam Banking Association expresses concern over the rapid expansion of some banks networks. The association warns that a high density of banks in some areas will lead to unhealthy competition to attract customers.

Vietnam Business And Financial News Network. Source [english.vietnamnet.vn]

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