Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Korea Development Bank gets preliminary nod to open branch in Vietnam after 6 years
Korea Development Bank (KDB) headquarters in Seoul / Courtesy of KDB
By Lee Yeon-woo
The Korea Development Bank (KDB) is nearing the launch of its new branch in Hanoi, Vietnam, six years after it submitted an application, industry officials said Friday.
The State Bank of Vietnam (SBV) issued a confirmation later Wednesday, acknowledging the receipt of KDB's application to establish the branch. It is regarded as a de facto preliminary approval — a critical step in the process of establishing a foreign bank branch.
This comes nearly six years after KDB submitted its application in July 2019.
The delay largely stemmed from the SBV’s concern that the number of banks in Vietnam is excessive relative to the size of its economy. Citing the need for financial system restructuring, the SBV put new applications on hold for an extended period.
The Industrial Bank of Korea (IBK) is also awaiting its own confirmation letter, following its application in July 2017 to establish a local banking subsidiary in Vietnam. It currently operates two branches, one in Hanoi and another in Ho Chi Minh City.
The Korean government said it has engaged in active financial diplomacy to foster a favorable environment for Korean banks in Vietnam. This includes two presidential summits, a prime ministerial meeting, high-level discussions between financial authorities and the foreign ministry, and the delivery of official letters supporting the application process.
KDB has also promoted its international financial capabilities, financial soundness and potential contributions to the Vietnamese market.
On Friday, KDB Chairman Kang Seog-hoon also met with the SBV's deputy governor in charge of licensing.
As Korea and Vietnam have grown into each other's third-largest trading partners and have deepened their economic cooperation, demand has increased for additional Korean banking institutions in Vietnam.
Currently, 41 Korean financial firms, including banks, are operating 55 local branches across the country.
"Following the issuance of the final license and the establishment of KDB's Hanoi branch, financial support for Korean companies operating in Vietnam is expected to become more extensive and efficient," an official from the Financial Services Commission said.
KDB said it will continue its close cooperation with Vietnamese authorities. An official noted that the bank "will make every effort to expedite the remaining procedures," as the confirmation letter is the "outcome of six years of concerted efforts by both KDB and the Korean government."
An IBK official also expressed optimism, saying they are “hopeful that the final approval for the local subsidiary will be granted soon.”