Banking giant HSBC has set up a wholly foreign owned bank in Vietnam, the first to do so under the communist-ruled country's opening of its financial services sector, the company said Monday.
The new entity, HSBC Bank (Vietnam) Ltd, based in Ho Chi Minh City, reported registered capital of 3,000 billion dong (172 million dollars) and is 100 per cent owned by The Hongkong and Shanghai Banking Corporation Limited.
The chief executive of HSBC Vietnam, Thomas Tobin, said the new bank's opening on January 1 demonstrated "our strong growth in developing markets and commitment to the development of Vietnam's financial and banking sector."
"Despite the turbulent market conditions in 2008, we see the underlying potential of the Vietnam economy with its dynamic workforce, stable pro-growth government, and rich natural resources," Tobin said in a statement.
HSBC, which had already operated several branches here, said all contracts, accounts and records of its customers, partner banks, suppliers and other parties had been automatically transferred to the new bank.
It said it would soon open a branch in southern Binh Duong province and planned, subject to approval, seven more outlets in the first quarter of 2009.
HSBC also holds 20 percent of the Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and 10 per cent of insurance firm BaoViet Holdings.
Vietnam pledged to open its banking sector to foreign banks when it joined the World Trade Organisation in early 2007, and last September the central bank granted HSBC permission to set up a fully foreign-owned one.
Vietnam, a country of 86 million people, has only a short tradition of retail banking, with families traditionally storing their wealth in gold and other assets, but the sector is now crowded with more than 80 banks.
The International Monetary Fund last month warned of the risk of bad loans in the Vietnamese banking sector and said there were "signs of strain emanating from deteriorating asset quality" which could intensify.