In the 2004-2006 period, foreign investors were warmly welcomed by Vietnamese banks which believed that foreign capital and technology would help them thrive. 

However, Vietnamese bankers realized that foreign strategic partners could not bring miracles.

Insiders feared that some foreign members of the board of directors fabricated figures about bad debts. At some banks, the board of directors could not reach an agreement because of conflicting views between Vietnamese and foreign shareholders.

A local newspaper quoted a Vietnamese banker as saying that there were business culture differences between Vietnamese and foreign managers, including disagreement about management methods and treatment of staff and different thoughts about business strategies. 

“For foreign investors, it is taboo for one bank branch to make up a high proportion of the whole bank’s revenue. Foreign partners usually ask Vietnamese banks to diversify their portfolios,” he said. 

“This way of doing business will not be accepted by banks which have advantages in certain fields (for example, forex trading or lending to oil & gas companies and exporters) and some areas (for example, business activities are mostly in HCM City),” he explained.

In many cases, contributing capital to Vietnamese banks did not bring high benefits to foreign partners. Under current laws, the foreign ownership ratio is not high enough to allow them to impose ‘new rules’. Foreign investors remain ‘small owners’ compared with Vietnamese bosses.

“This explains why conflicts exist in most banks with foreign shareholders,” he said.

The year 2017 saw a number of foreign investors leaving their Vietnamese partners and divesting from banks they once made every effort to develop.

However, Thoi Bao Kinh Te Sai Gon said that Vietnamese banks remain attractive to foreign investors.

The retail division of ANZ and Prudential finance company, for example, has been transferred to Shinhan Bank of South Korea.

Investors from China, South Korea, Thailand and Singapore, which have a business culture closer to Vietnam, are replacing partners from countries with cultural differences.

A senior executive of a consultancy firm said that he had arranged a deal in which South Korean and Japanese investors wanted to buy shares of a Vietnamese company. 

The South Korean investor was chosen because it had similar business practices. The Japanese investor wanted to change the accountancy method and business model.

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Kim Chi