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PRUDENTIAL BIDS TO WIN HEARTS AND MINDS IN VIETNAM

Pru will look to launch branded credit cards, plus small business & auto loans later this year

Friday June 6,2008

By Andrew Johnson, Associate City Editor in Ho Chi Minh City

PRUDENTIAL is launching a major push into Vietnam in a bid to become the dominant financial player in one of the world’s fastest-growing economies.

The moves involve beefing up a significantly broader range of services outside its core insurance business in a country with 86million people — the world’s 10th-largest population.

Vietnam’s growth is 8 per cent a year, second only in Asia to China.

The new Prudential services include its first home and personal loans business since Egg, the UK-based internet bank it offloaded to Citigroup after it failed to deliver, and its only Asian private equity business.

Pru will look to launch branded credit cards, plus small business and auto loans later this year.

It will face stiff competition from other British companies and problems from high fuel and food prices which have sparked galloping inflation.

HSBC has recently been awarded a banking licence and invested $255million (£130million) in buying a 10 per cent stake in state-owned insurer Bao Viet, implying a market value of $2.55billion.

Pru executives believe their insurance business could be even bigger, having leapfrogged Bao Viet to win
37 per cent of a fast-growing market during the first quarter of this year. It is already Vietnam’s biggest fund manager, with $1.4 billion under management.

Pru’s Asian insurance chief Huynh Thanh Phong said the company was looking to push on from these successes due to the company’s decision to enter Vietnam early, opening its first office in 1995. The Pru name is more widely recognised than Bao Viet’s among the Vietnamese, gaining credibility from its 160-year history.

The company’s short-term growth could be hit by Vietnam’s economic problems. Inflation reached 25 per cent in May, and the stock and housing markets have both crashed more than 40 per cent this year. The one-party government has been hiking interest rates, curbing inflation at the expense of growth.

But Phong is optimistic: “Over the next 20 years, Vietnam’s growth will be phenomenal.”

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