HSBC and StanChart step up banking in Vietnam

By Ho Binh Minh

HANOI (Reuters) - HSBC Holdings (HSBA.L) (0005.HK) and Standard Chartered Plc (STAN.L) won approval to be the first foreign banks to open wholly-owned units in Vietnam, as the communist-run state opens up more to foreign investment.

HSBC, Europe's largest bank which first arrived in Vietnam in 1870, said in a statement on Tuesday it would headquarter its Vietnam-based bank in Ho Chi Minh City, the country's commercial centre.

"We aim to start operating through our new local entity as early as possible," HSBC's local CEO Thomas Tobin said, adding HSBC hoped to be the first foreign bank to operate a fully-owned local entity in the fast-growing Vietnamese banking sector.

Separately, the State Bank of Vietnam said it also licensed Standard Chartered to open a wholly-owned bank based in Hanoi and with a capital base of $61 million (34.7 million pounds).

"This is a clear sign to show Vietnam's strong commitment toward WTO," the central bank said in a statement. Vietnam is opening up more to foreign banks as part of its commitments to the World Trade Organisation, which it joined last year.

HSBC and Standard Chartered now have 12 months to start operations in Vietnam, where only 10 percent of the 86.5 million population have bank accounts. State-run Agribank, Vietnam's biggest enterprise, runs half of the 4,000 bank branches nationwide.

HSBC, Standard Chartered, now operating branches in Hanoi and Ho Chi Minh City, are among nearly 40 foreign banks in the country, all holding between them 14 percent of market lending.

HSBC Bank Vietnam Ltd would have a registered capital of $182 million, the State Bank of Vietnam said.