One of Vietnam's fast growing breed of joint stock banks has joined up with one of China's big four commercial banks with the aim of providing superior trade finance services.

The Vietnam Technological and Commercial Joint-stock Bank (Techcombank) has signed with the Bank of China (BOC) an agreement on cross-border payment co-operation.

L/Cs included

Under the agreement, each bank will open current accounts with the other and they will co-operate in banking services such as telegraphic transfer, commercial documents, payment orders, letters of credit (L/Cs) and payment guarantees.

Techcombank's branch in Lao Cai province and the Hekou BOC branch in Yunnan will implement the agreement, which aims to facilitate cross-border business-to-business payments and reduce the circulation of cash in areas around the two countries' borders.

Trade finance development

Banks and officials have long recognised the need to improve trade finance services to boost official trades between the two countries, which has increased sharply by around US$5-6 billion in annual turnover over recent years.

Vietnam and China have both called for local currency L/Cs to support economic corridors connecting various cities and provinces in the two countries. (DC World News, 20 September 2004).

Foreign interest

Hanoi-based Techcombank is Vietnam's third-largest joint stock bank, with around 45 branches and assets of $482 million as of end 2004.

The country's banking sector is currently dominated by five much larger state-run commercial banks, but global banks are developing an appetite for Vietnamese business.

Global giant HSBC said in late December 2005 it had struck a deal to buy 10 per cent of Techcombank for US$17.3 million in cash. HSBC is the third foreign bank to buy into a Vietnamese lender.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.