Korean lenders aspiring to become major market players

VinaCapital and South Korean firm GS Energy entered into an MoU with the Export-Import Bank of Korea (KEXIM) last week.

The agreement will expedite the financial progression of the Long An I and II liquefied natural gas power plant projects, representing a significant breakthrough for South Korean banking conglomerates in Vietnam.

The bilateral agreement is aimed at enabling thorough investigation of potential opportunities for KEXIM to extend financial aid and credit facilities to Long An Energy Group.

This joint venture is a brainchild of VinaCapital and GS Energy. Yoon Hee-seong, CEO of KEXIM, acknowledged the strategic significance of the power plants, vowing KEXIM’s unwavering support to South Korean businesses and engineering, procurement, and construction contractors engaged in the project.

Meanwhile, Vietnam’s Deputy Prime Minister Le Minh Khai welcomed representatives from major South Korean financial institutions, Industrial Bank of Korea (IBK) and Korea Development Bank (KDB), for talks regarding potential collaborations amid Vietnam’s banking system ovserhaul.

DPM Khai’s interaction with Kim Sung-tae and Kang Seoghoon, chairmen and CEOs of IBK and KDB respectively, underscored the pivotal role of foreign financial entities in reinforcing Vietnam’s banking sector restructuring.

Seoghoon extended his admiration for Vietnam and conveyed KDB’s aspirations to align with Vietnamese companies in high-tech innovations, digital transformation, and green energy initiatives.

“Furthermore, we plan to establish a KDB branch in Vietnam to aid Vietnamese enterprises in their global market expansion, catalysing job creation and economic growth,” he said.

Khai said that he appreciated the KDB’s successful operations as a government-owned development bank. He referred to the MoU inked between KDB and the Vietnamese Ministry of Finance.

The purpose behind these agreements is to share valuable knowledge and experience to aid the ministry in determining appropriate operational models for restructuring the Development Bank of Vietnam.

Current players in the Vietnamese financial market, such as IBK, are boosting their activities in the country. With branches operating in Hanoi and Ho Chi Minh City, and assets in Vietnam tallying up to $1.5 billion, IBK is offering loans to South Korean businesses in Vietnam, along with local partners. The bank also plans to establish a legal entity in Vietnam to cater to Vietnamese businesses, particularly small- and medium-sized enterprises.

As Vietnam’s financial landscape continues to evolve, foreign financial entities have been encouraged to participate in the restructuring process, particularly in reforming credit organisations and handling weaker banks.

This reformative initiative is not only advantageous for financial organisations seeking to establish a new commercial presence in Vietnam, but also brings opportunities for active participation from South Korean banking and financial institutions, DPM Khai said.

“The State Bank of Vietnam is processing licence applications for new entities, including those from six South Korean banks, including IBK and KDB,” he said.

Other South Korean banking entities extending their footprint in Vietnam include Shinhan Bank and Woori Bank.

A collaboration of Samsung Vietnam and Shinhan Bank Vietnam, cemented in an MoU last month, is set to further accelerate the digital payment landscape. The alliance merges Samsung Wallet’s digital wallet technology with Shinhan’s financial services.

Lee Chung Lyong, general director of Samsung Vina Electronics, believes this synergy will shape a digital payment platform for the Vietnamese market.

In addition, the bank has also teamed up with Nguyen Hoang Group (NHG), a local educational group, to offer an interest-free tuition fee financing programme for parents whose children attend NHG-affiliated educational institutions.

The initiative also supports financial assistance and future credit facilities for infrastructure development as well as teaching equipment procurement within NHG’s educational network.

Woori Bank Vietnam, under its new CEO Park Jong Il, aspires to become a prominent player in the Vietnamese market.

“The bank, leveraging its strong brand and Woori Financial Group’s investment, has witnessed steady growth in the last five years since its inception in Vietnam, focusing primarily on foreign branches and corporate finance,” the CEO said.

Jong Il also stressed the need for a second leap forward, positioning Woori Bank Vietnam as a top retail business operator in Vietnam’s market while expanding localisation strategies targeting local customers through Vietnamese personnel.

DB Insurance continues its expansion in the Vietnamese insurance market with the acquisition of a 75 per cent ownership stake in Saigon - Hanoi Insurance Corporation (BSH), following its recent deal to acquire Aviation Insurance, positioning itself as a major player in the industry.

More than 100 MoUs were signed by South Korean and Vietnamese businesses at the Vietnam-South Korea Business Forum on June 23.

Vietnam’s cosmetics segment is thriving as South Korean brands leverage the rising influence of its culture to meet the growing demand for high-quality beauty products.