State bank stops banks’ network expansion

LookAtVietnam – While commercial banks rush to set up more branches, the central bank is attempting to slow the expansion plan.

The central bank has recently sent a draft document to commercial banks outlining how to manage the development of branch networks. It says there will be caps on the numbers of branches commercial banks can open in one area which will be influenced by plans of other local banks.

 

Under the draft document, provinces and cities will be divided into three groups – depending on size with each having set limitations on the number of branches banks can open.

 

Despite seemingly limiting their growth, many commercial bank workers are still welcoming the move. Many believe too many bank branches have been opened in the last two years.  The resulting fierce competition, has forced banks to use panic measures to chase clients.

 

Though the State Bank of Vietnam has only recently consulted with banks about the draft document, banks believe that in reality, the central bank has been already trying to hinder the expansion. It seems that the State Bank has been considering the proposals to set up new branches and transaction offices more carefully as part of licensing procedures.

 

The Bank for Foreign Trade of Vietnam (Vietcombank) is a typical example. It asked for permission to open 10 more branches across the country this year. However, the State Bank has just given the nod to the opening of five branches so far.

 

Analysts believe that the new decision, if given the go-ahead, will not much affect big banks which have many branches already. However, it will badly affect smaller banks with ambitions to grow.

 

VietNamNet/DTCK