When starting a business in Vietnam, one of the first key decisions is choosing the right bank to open accounts for your operations. With 49 banks operating in Vietnam, both Local and international, the choice can be overwhelming. Should you go for a Local bank or an international one? Let’s take a closer look at the advantages and disadvantages of each option to help you make an informed decision.

Local banks in Vietnam

Local banks in Vietnam are Vietnamese banks owned and operated mainly within the country. Imagine them as homegrown financial institutions. They’re not branches of foreign banks, but rather banks established and headquartered in Vietnam, following Vietnamese regulations.

As a result, these banks are part of the Vietnamese banking system. They have a deep understanding of the process and finances in Vietnam, and their system is highly customized solely for transactions within the countries. Making Local transactions fast and easy

What are the advantages and disadvantages of Local banks in Vietnam?

Advantages:

• Flexible and quick bank account opening: Local banks are generally more flexible with corporate bank account opening, often requiring minimal documentation and KYC to get started.
• Fast  Domestic Transactions: Local banks are part of the Vietnamese banking system, ensuring swift transactions within the country in seconds.
• Linking with the online tax system: Unlike international banks, Local banks in Vietnam connect directly to government systems, enabling faster tax payments, smoother regulatory processes, and real-time data exchange for enhanced transparency.

Disadvantages:

• Limited English customer service: The support system of Local banks can be challenging for foreign investors due to limited English proficiency among staff, especially when communicating via hotline.
• Online Banking Issues: The online banking systems of Local banks are relatively new and often can experience errors, including pending transactions and difficulties accessing OTP codes.
• Strict International Transfer Procedures: Local banks follow rigorous procedures for international transfers (payout of Vietnam), resulting in a lengthy process and extensive paperwork.

Vietcombank (VCB), for instance, is the largest Local bank in Vietnam. It offers lightning-fast Local transactions and minimal KYC (Know Your Customer) requirements, allowing for quick account openings, and does not require a Chief Accountant or the account holder musts stay in Vietnam.

However, while VCB excels in speed, its customer support has language gaps for foreign clients. At VNBG, our consultant will assist our clients with banking procedures, communications, and paperwork.

International banks in Vietnam

Many investors prefer international banks for business in Vietnam, and there are several reasons for this preference. Prestigious international banks like HSBC, Standard Chartered, Citibank, UOB, and OCBC are favored by many FDI companies in Vietnam. Let’s explore the pros and cons of these banking options, which you may find relevant to your own experience.

What are the advantages and disadvantages of international banks in Vietnam?

Advantages:

• • Exceptional Customer Service: International banks offer excellent English customer service, making it easier for foreign clients to communicate and resolve issues.
  • Efficient International Transactions: With advanced banking systems and global connections, international banks facilitate smoother and faster international transactions.

• Completed online banking system: The online banking system stands as a key advantage for international banks, boasting adherence to global standards and extensive development. Unlike Local banks, they operate with minimal service disruptions and errors, ensuring reliability for customers.

Disadvantages:

• Stringent Requirements: International banks demand strict and complex information from account holders. The account holder must reside in Vietnam, and the company must appoint a Chief Accountant after one year. From our experience when a local company opens a bank account would take up to 1 month, or the FDI company takes around 2 months to register at the international bank. Because they would take time to check and evaluate the company background and there are chances that they would reject the application.

On the other hand, if your parent company overseas wants the Vietnamese company to set up bank accounts at an international bank to align the financial system.  The banks need a referral letter from the parent company to proceed with opening a bank account for the local company. And the process would still take a long time to complete.

This is important for you to notice because it will affect the time you have for capital contribution in the future. If it takes too much time to open the bank account you can face penalty and face unnecessary problems for late capital contribution.

• Link with Government System (Tax online system): The international banking system does not link with Local government systems due to their banking policies that protect account holders. They do not allow third-parties to automatically deduct amounts without the account holder’s approval. This setup can hinder efficient and seamless financial transactions between international banks and Local governments, potentially leading to delays and complications in fund transfers and regulatory processes.

Local vs. international banks (summary)

How do you decide which bank to use?

Choosing between a Local or international bank depends on your business needs and the nature of your transactions.

If your business primarily deals with international customers and conducts numerous international transactions, an international bank would be more suitable.

Conversely, if your customers are mainly based in Vietnam and you rarely need to perform international transactions, a Local bank would be a better fit.

As a matter of fact, you can open multiple company current/payment accounts in different banks which you think is necessary for your business. Meaning that you can open bank accounts in both Local and international banks.

However, your business can have only one capital bank account for your business. This is the main reason why you need to choose the bank you want to open the accounts in the first place. And you have to close the current capital account before opening a new one in another bank.

Read more about the capital and payment bank account

How can VNBG help you open your company’s bank accounts in Vietnam?

At VNBG, we offer comprehensive bank account opening services integrated into our incorporation packages. We work closely with Vietcombank (VCB), the largest Local bank in Vietnam, known for its flexibility in opening accounts for foreign-owned companies. We also partner with Standard Chartered for setting up international bank accounts. If you want to set up in another bank, we are also able to assist you with the document preparation, process, and more.

Besides our incorporation services, we provide standalone bank account opening services and a wide range of secretarial services, including accounting, bookkeeping, compliance reporting, recruitment, and more. Our goal is to ensure your business operates efficiently and effectively in Vietnam.

Ready to do business in Vietnam? Contact our experienced consultants today and get started on the right foot. Your business deserves the best start, and we’re here to help you every step of the way.