With Vietnam's commercial banks ready for the first time ever to raise capital by selling shares to foreign banks later this year, nearly three dozen foreign banks have already established a presence in this modestly growing Asian market, according to a report in a state-owned English language e-newspaper.

VietnamNet reports that a significant amount of foreign bank activity in the market is currently focused on providing letter of credit (L/C) related banking services and technical assistance to local banks and information on Vietnam to foreign parties in aspects of trade and investment, including L/Cs.

L/C credit

Relations between foreign and local banks currently focus on guarantees for services related to L/Cs, short and long-term credit products, international payments and foreign exchange trading, VietnamNet reports.

Foreign banks also apparently reserve credit for some Vietnamese commercial banks - including the five state commercial and some joint stock banks - to provide L/C confirmation and re-guarantee services.

Technical assistance

Foreign banks provide technical assistance to Vietnamese partners related to L/Cs, money transfers, foreign exchange and deposit interest rates, according to VietnamNet.

Foreign banks based in Vietnam also provide information to their head offices and sometimes third party clients on Vietnamese market conditions, perhaps flagging local business and investment opportunities.

Similarly, foreign banks provide information on L/C transactions with Vietnamese banks, according to the report.

Foreign presence

At the beginning on 2006 there were 33 foreign banks - mainly from the US, Japan, Australia, France, Taiwan and the Republic of Korea - operating in Vietnam.

Most foreign banks are headquartered in Ho Chi Min City and Hanoi.

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