Foreign banks continue to invest in Vietnam

Deutsche Bank completes the purchase of a 10% stake in VietnamÆs Habubank as HSBC finalises its 15% investment in Techcombank.
Yesterday both Deutsche Bank and the Hongkong & Shanghai Banking Corporation announced that they were either investing in or upping their stakes in Vietnamese banks.

Deutsche Bank says that it has completed the purchase of 10% of the issued capital of Hanoi Building Commercial Joint Stock Bank (Habubank). This follows the announcement in February 2007 of an agreement to buy the shares pending administrative and regulatory approvals.

At the same time, HSBC announced that it had completed its acquisition of an additional 5% stake in Vietnam Technological and Commercial Joint Stock Bank (Techcombank) for $33.7 million. That deal - which increases its total stake to 15% - was first announced in July.

Both banks issued statements saying how pleased they are to be closely involved in the growth of the emerging market.

ôVietnam is making great strides in opening up its economy and particularly, its financial sector," says Vincent Cheng, chairman of HSBC Bank, adding that it was a "momentous occasion" to be the first foreign bank in Vietnam to increase its investment in a domestic bank to 15%. HSBC bought the initial 10% stake in Techcombank in December 2005 for $17.3 million.

Founded in 1993, Techcombank is one of the countryÆs largest joint stock banks, with assets totalling Vnd25,000 billion at May 31, 2007. TechcombankÆs 2,000 staff serve almost 200,000 personal and over 13,000 commercial customers through a network of 100 branches and transaction offices in 20 provinces and cities across Vietnam.

HSBC also recently announced an agreement to acquire a 10% stake in VietnamÆs leading insurance and financial services group, Vietnam Insurance Corporation (Bao Viet).

As for Deutsche Bank, Colin Grassie, chief executive officer of Deutsche Bank Asia-Pacific, says: ôThis [Habubank] acquisition will allow Deutsche Bank to further build on our strong presence in Vietnam." He adds that the deal allows the bank to ôparticipate directly in the development of the rapidly expanding retail financial services sector in the countryö.

Established in 1989, Habubank was the first joint stock bank in Vietnam and is today a leading bank in the country with a network of 26 branches and some 750 staff providing retail and small- and medium-enterprise banking services to over 111,000 retail and business clients.

ôThis transaction represents for us a further step into the fast growing consumer markets of Asia,ö says Peter Schedl, Deutsche Bank's head of private and business clients, Asia-Pacific, noting that his department has ôinvested into three of the fastest growing economies in the region û China, India, and Vietnamö.

HSBC and Deutsche Bank are not alone. In July, AustraliaÆs third largest lender, ANZ, bought a 10% stake in a leading Vietnam stock broker, Saigon Securities. The deal cost ANZ $88 million and gave it a stake in a business which has a 30% share of Vietnam's stock broking market.

ANZ has operated branches in the country since 1993 and, in December 2005, it acquired a 10% interest in Sacombank for $27 million. It also has an agreement with Sacombank to form a credit card joint venture.
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