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Banks branches pop up on every corner
Commercial banks have hurried plans to expand the number of branches nationwide as part of a strategy to improve competitiveness and broaden networks.
Within just one week, from August 3 to August 9, 2010, Vietbank opened eight new branches, including three in HCM City, four in Hanoi and one in Da Nang City. The total number of Vietbank branches in Vietnam has reached 63.
Just several days later, the State Bank of Vietnam (SBV) approved two more Vietbank branches in Nghe An and Long An Provinces. In July and August, Viet A Bank opened three new branches in Quang Ngai, Binh Dinh and An Giang.
Other big banks like HD Bank, Maritime Bank, Dong A Bank, Techcombank and ACB are also rushing to open new branches. On August 20, ACB inaugurated its 260th branch.
Meanwhile, a Techcombank representative reported that the bank will have many more branches in HCM City and Vung Tau. In sum, the bank will have 300 branches and transaction points in 40 cities and provinces nationwide by the end of the year.
Explaining the plan to open more locations, the representative noted that they must widen the network to meet increasingly high demand.
Vietbank maintained that network expansion is a part of a larger plan to use new chartered capital in the most effective way. As per request by SBV, by the end of 2010, all banks in Vietnam must have three trillion dong in chartered capital. Those that do not must gradually increase their chartered capital. Vietbank argued also that network expansion is necessary to develop retail banking.
Dr. Tran Hoang Ngan, Deputy President of HCM City Economics University, conceded that the national economy has prospered, so now is a good time for banks to expand business and their market share. To do so, banks naturally think that they need to open their network and increase branch numbers.
One general director of a big bank has also predicted that more and more bank branches will be opened from now until the end of the year.
Network expansion can help create more strength for banks to consolidate their positions, polish their image, provide more services and upgrade financial capability.
“If compared with the population density, the current banking network is still not large enough to meet demand. The network’s expansion will help banks develop services and banking products,” Ngan remarked.
Last year, on the day of officially joining Vietnam’s financial system, then General Director of Hong Leong Bank, Le Dinh Long, asserted: “In order to succeed in Vietnam, banks need to have wide networks that allow them to expand their retail banking market share.”
At this moment, domestic banks have advantages with large network that allow them to approach clients easily, but this is only temporary.
One general director of a small joint-stock bank admitted that corporate governance and technologies cannot catch up with the network boom, which has made banks face many risks. He believes the biggest risks for expansion-minded banks are staff qualifications and network management capability.
A finance expert in HCM City also expressed concern that overly-rapid expansion may lead to too many banks in the same areas. This would force banks to compete fiercely and raise interest rates to lure customers. This would hinder the plan to gradually ease interest rates initiated by the Government.
vietnamnet, VnExpress
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