Banks requesting removal of blocks to expansion

VnnNews – Commercial banks have urged SBV to remove the instruction on halting licensing for new bank branches.

Two years ago was the time when commercial banks rushed to set up new branches to expand their network. At that time, the network expansion was applauded by the central bank which said that this was a necessary move to prepare for stiff competition foreign banks flocked to Vietnam following Vietnam’s WTO commitments.

 

The network expansion movement led to the sharp increase in the number of bank branches and transaction offices. Asia Commercial Bank (ACB), for example, by the end of 2009, had had 237 branches nationwide, up by 51 over 2008. Sacombank has 316 bank branches in 45 out of 63 provinces nationwide.

 

However, commercial banks believe that they still need to open more bank branches in order to become stronger and more competitive. The plan to set up more branches is a part of all banks’ plans to raise the chartered capital to three trillion dong minimum by the end of 2010 as required by the State Bank.

 

However, the plan to open more branches has not been fulfilled yet, because they have not seen any signals from the State Bank which shows that the central bank may remove the decision on halting licensing of new bank branches.

 

The problem is that in late 2009, the State Bank released a decision on temporarily halting the licensing of new bank branches in 2009. However, it seems that the decision is still valid until 2010.

 

Bankers are trying to persuade the State Bank to remove the ban, or they will not be able to compete with foreign banks. The advantage of domestic banks is not high technology or high financial capability, but the wide network. If the central bank does not allow to open more branches, banks will lose all of their strength.

 

Representative of Indovina Bank, the bank with nine branches nationwide, made a direct proposal to allow it to set up more branches in HCM City and Hanoi at the meeting with the State Bank recently. Prior to that, Chairman of HCM City Housing Development (HD Bank) also made the same proposal at the working session with Governor of the State Bank.

 

In response to the banks, Governor of the State Bank said that in principle, the central bank does not prohibit bank expansion, but banks need to consider the efficiency of the network expansion.

 

Under the current regulations, banks must have 100 billion dong to set up a new branch in Hanoi, HCM City, and 50 billion dong to open a branch in other localities. In HD Bank case, the bank’s chartered capital is 1,550 billion dong, and if referring to the above said requirements, the bank has no ‘quota’ to open more branches.

VietNamNet/DTCK

 

Tags: Bank Branches, Central Bank, More Branches, Open More Branches, State Bank, The Central, The Central Bank, The Network Expansion, The State, The State Bank, To Open More, To Open More Branches, Physics games

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