|The deal between Vietcombank and its partner is expected to be signed for at least 10 years and be worth as much as USD$1 billion during the term of the contract. — Photo topbank.vn|Viet Nam News
HÀ NỘI — Joint Stock Commercial Bank for Foreign Trade of Việt Nam (Vietcombank) plans to invite bids from insurers for exclusive rights to distribute life insurance products through its network.
The deal between Vietcombank and its partner is expected to be signed for at least 10 years and be worth as much as USD$1 billion during the term of the contract.
Vietcombank has chosen Credit Suisse Group AG to advise it on finding a new insurance distribution partner.
According to Bloomberg, insurers have been attracted to a growing middle class in Việt Nam, which chalked up an average economic growth of 6.3 per cent during 2005-17.
Deemed as win-win deals for both commercial banks and insurance companies, bancassurance partnerships have been developing in Việt Nam in recent years.
The model creates a convenient and reliable sales channel for insurance firms while giving banks a stable source of non-interest income through sales commissions.
Last year, several bancassurance deals were inked, including Sài Gòn Thương Tín Commercial Joint Stock Bank’s 20-year agreement with Dai-ichi Life Holdings Inc. and Techcombank’s 15-year deal with Manulife Financial Corp.
Contributions of bancassurance sales in Việt Nam jumped from one per cent in 2013 to more than 10 per cent in 2017. This is a much smaller amount than in other Asian markets such as Thailand, Indonesia, Singapore and Hong Kong (China), where bancassurance makes up between 30 and 50 per cent of overall insurance distribution. — VNS