Taiwanese Banks Rush to Set Up Footholds in Vietnam

Taipei, March 8, 2011 (CENS)--Taiwan's domestic banks have in recent years actively established footholds in foreign countries to better serve Taiwanese enterprises operating abroad, particularly in Vietnam and mainland China.

In addition to mainland China, Vietnam has become a favorite place for Taiwanese banks to set up their overseas footholds. The statistics released by the Cabinet-level Financial Supervisory Commission (FSC) showed that so far eight Taiwanese banks have already established branches in Vietnam and six have representative offices there.

Some more Taiwanese banks are reportedly to follow suit soon. Among them, the Shanghai Commercial & Savings Bank (SCSB) has decided to establish a branch in Dong Nai Province this year, while the Taiwan Cooperative Bank and the Bank of Taiwan are planning to file applications soon for setting up rep offices there .

First Commercial Bank, a government-linked bank in Taiwan, established its first branch in Vietnam in 2003, which is located in Ho Chi Minh City; and in February of this year the bank set up it second Vietnam branch in Hanoi.

K.K. Peng, vice president of SCSB, indicated that most Taiwanese banks have chosen HCM City and Hanoi as their priority locations for their footholds in Vietnam, but SCSB has chosen Dong Nai mainly because there are more Taiwanese enterprises operating in Dong Nai than in HCM City.

Insiders said that Vietnam is increasingly attractive to Taiwanese banks as an increasing number of Taiwanese enterprises have moved their operations from China to Vietnam to lower manufacturing cost. Today Vietnam's labor wages and land cost are much lower than those of China, not to mention the incentives offered by the Vietnamese government to investors in traditional industries.

Moreover, the gap between deposit and lending interest rates in Vietnam is larger than in Taiwan. This means that Taiwanese banks in Vietnam can earn better profits from lending business there. Cathay United Bank, a leading private Taiwanese bank, has a subsidiary in HCM City and a branch in Hanoi. The bank's subsidiary in Vietnam can earn about US$20 million a year.