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In July 2017, IBK Vietnam submitted an application to the State Bank of Vietnam to establish a 100% foreign-owned bank. The information was disclosed during a working session with Deputy Governor Nguyen Ngoc Canh and Mr. Chang Min Young, Chairman and CEO of IBK, on April 22.
Following the submission, IBK Vietnam was granted a license to establish a bank with 100% foreign capital in Vietnam. The approval marks the first time since 2008 that the State Bank has licensed the establishment of a new bank, including both domestic banks and 100% foreign-owned banks.
IBK has been operating in Vietnam since 2008, initially with a branch in Ho Chi Minh City and later expanding to a branch in Hanoi in 2013. By July 2017, IBK filed with the State Bank to request permission to establish the new 100% foreign-owned bank.
Mr. Chang Min Young said IBK was established with the goal of supporting small and medium-sized enterprises (SMEs), noting that about 75% of its credit outstanding is targeted at this segment. He added that IBK’s experience in financing mechanisms for SMEs could support advisory and cooperation activities in Vietnam.
Deputy Governor Nguyen Ngoc Canh said the SME sector has been identified as a key economic driver, contributing to growth, employment, and social welfare. He emphasized that demand for capital for SMEs in Vietnam remains very large.
According to Nguyen Van Than, Chairman of the Vietnam Association of Small and Medium Enterprises, Vietnam currently has nearly one million SMEs, accounting for about 97-98% of all enterprises. The private sector contributes around 50% of GDP, mainly driven by SMEs. SMEs also employ about 82% of the workforce and contribute about 30% of budget revenue.
Mr. Than said domestic SMEs are relatively young compared with regional and global peers, with limitations in capital accumulation, knowledge, technology, and business experience. He noted that more than 90% of enterprises have charter capital under 10 billion VND, technology is outdated, management levels are not high, and the ability to mobilize and absorb capital is limited.
He also pointed to challenges faced by a portion of these enterprises, including the “three difficulties” of access to capital, access to land, and administrative procedures.
The State Bank leadership said it hopes that, with more than 60 years of experience, IBK Vietnam will continue to provide comprehensive financial services to Korean enterprises operating in Vietnam as well as Vietnamese SMEs.
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