In 2019, foreign banks reportedly achieved positive business results in Vietnam. As a result, they plan to expand operations in Vietnam by increasing capital, opening more branches and transaction offices across the country, and Hanoi is one of the main priority cities.
Some illustrations of 2019 are: Standard Chartered Vietnam in February completed its plan to increase its charter capital from VND 3,076 trillion (USD 132.19 million) to VND 4,215 trillion (US $ 180.9 million).
Earlier, Woori Bank Vietnam, a subsidiary of Woori Bank of Korea, also increased its capital by 53% to VND 4.6 trillion (USD 197.42 million). In November, KEB Hana and BIDV completed the largest USD 875 million M&A case in the banking industry.
Here are four characteristics that foreign commercial banks often desire when looking for a location to open their transaction office in Hanoi:
1. Location:
When choosing their desired location Commercial banks tend to prefer the first floor of buildings than renting in townhouses of private owners. The spaces of building projects normally have more professional management as well as longer-term stability.
Savills advised successfully HSBC, ShinHan, WooriBank for their transaction offices on the first floor of Pacific Place, Leadvisors Place and Asia Tower.
2. Area:
The required area for the transaction office is usually about 100 - 150 m2 and a small area for ATMs. In case of leasing for branches, banks will need more space on the upper floors for their back office and corporate banking services.
3. Sector:
Priority position: Foreign banks will prefer to open in concentrated areas of offices, Expat areas or tourist areas. This will attract visitors operating in transactions such as money exchange and money transfer.
In addition, these locations are significantly better in terms of branding and visibility. Hoan Kiem, Ba Dinh, Tay Ho and Keangnam areas are customer priorities.
4. Timeline:
Since these favorable locations on the first floor of buildings are relatively rare; banks tend to start seeking potential options from the beginning of the year.
Compared to Ho Chi Minh market, finding a space to lease for transaction office in Hanoi seems be less challenging and minimize financial risk. In Hanoi, Banks are one of the most favorable tenants which add value to any project. Therefore, landlords are likely to accept banks to secure the space by paying a deposit for a few months without charging fees until they have their license.
Foreign banks must have a license to open a transaction office and it normally takes time to submit necessary documents to the State Bank. The situation will be more difficult in Ho Chi Minh City when landlords have a lot of choices and do not necessarily need to prioritize banks for their first floor. As a result, they tend to begin the lease term regardless of whether the bank has received its license.
New office building 2020:
Capital Place - the first international Grade A office building in Hanoi, developed by Capitaland Singapore and Mitsubishi Estate of Japan. The project will open in the third quarter of this year.
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