Some commercial banks have consulted with their shareholders about plans to set up overseas remittance service companies as they can see great business opportunities from the service.
Kieu hoi, or overseas remittance, refers to money remitted from overseas by Vietnamese who settle down in foreign countries or work for certain periods.
An official report showed that $1.15 billion worth of kieu hoi has been remitted to HCM City in the last three months. The city received $5.5 billion worth of kieu hoi in 2015. It is estimated that 70.8 percent of kieu hoi has been flowing to production and business, and 21.6 percent to the real estate sector and 7 percent on daily lives.Tran Van Trung, director of Dong A Overseas Remittance Service Company, believes that the overseas remittance in 2016 would surely be higher than last year thanks to the recovery of the real estate market.
This could be the reason for Bac A Bank to decide to set up an overseas remittance service company with charter capital of VND77 billion. The subsidiary would provide overseas remittance services under the online and offline modes, with the former being the focus.
The management board of Orient Bank has also asked its shareholders about the establishment of an international remittance, a bank’s subsidiary with the chartered capital of VND25 billion.
The company is believed to operate well with the expected revenue of VND2.16 trillion in 2016, while the figure is hoped to rise to VND4.13 trillion in 2017 and to VND6.885 trillion in 2018.
Sources said other joint stock banks were also discussing setting up subsidiaries which would provide overseas remittance services. An analyst has predicted that there may be an ‘overseas remittance service company movement’ to follow the ‘finance company movement’.
A lot of banks have been running their remittance service companies well for a long time, including Vietinbank, a state owned bank, and Dong A, a joint stock bank.
However, analysts warned that it would be not easy to set up remittance service companies as the State Bank of Vietnam has tightened control over companies of this kind.
The central bank in January released a legal document stipulating that banks must have a healthy financial situation, make profits in the last two years and have a non-performing loan ratio of below 3 percent of total outstanding loans to be eligible for establishing remittance companies.