Foreign banks eye bigger Vietnam role as growth ambitions fuel funding crunch
HANOI - Foreign banks are seeking a bigger foothold in Vietnam by ‌extending hard-currency loans to local lenders squeezed between rising domestic funding costs and government pressure to expand credit to meet ambitious economic growth targets, bankers and analysts said.
Foreign banks are pursuing greater involvement in Vietnam's financial sector as the nation aims for 10% annual growth and ramps up infrastructure investments. Foreign lenders, including Chinese, Taiwanese, and Middle Eastern banks, are interested in providing hard-currency loans to local banks, which are facing rising domestic funding costs and government pressure to expand credit.
Vietnamese banks are expected to finance most of the $200 billion in planned infrastructure projects aimed at supporting annual growth of at least 10% through 2030. Japanese and South Korean banks already have strategic investments in some of the country's largest lenders. In June, HDBank secured a $721 million syndicated loan from Standard Chartered, Commerzbank, and MUFG Bank, surpassing its initial fundraising target by about 60%.
Techcombank is seeking a $1 billion foreign loan, pending regulatory approval. Rising domestic interest rates make offshore funding more economically attractive for medium to long-term financing. Offshore loans to Vietnamese banks often offer lower interest rates than domestic deposits. The central bank's recent easing of prudential rules and revision of how it calculates the deposit-to-loan ratio give banks more room to extend credit.
However, the heavy reliance on banks to finance the infrastructure boom raises concerns about Vietnam's financial stability.
Written by urgent.news from Bangkok Post Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
