The plan was revealed by Kim Sung Tae, chairman and CEO of IBK, during a meeting with Deputy Prime Minister Ho Duc Phoc on September 23, where the two sides discussed opportunities to strengthen financial cooperation and support economic ties between Vietnam and South Korea.

"IBK will contribute to the economic development of Vietnam, especially by supporting small and medium-sized enterprises (SMEs), as well as participating in infrastructure ventures and financial investments," said Tae.

The DPM welcomed IBK’s initiative to set up a new legal entity in the country. He asserted that the government will create improvements for foreign businesses, including South Korean companies, to operate effectively and sustainably.

In May, the state-run IBK secured preliminary confirmation from the State Bank of Vietnam to set up a full subsidiary in the country. The bank currently runs two branches in Hanoi and Ho Chi Minh City, which are expected to be merged into the new subsidiary once it is formed.

"We are inspired by South Korea’s success in nurturing SMEs, many of which have grown into global conglomerates. In Vietnam, SMEs make up over 98 per cent of all businesses, prompting the government to implement measures to support their sustainable growth. We hope IBK can continue contributing to Vietnam’s economic development," said DPM Phoc.

Besides IBK, Korea Development Bank is also advancing its plan to open a branch in Hanoi following the central bank's approval of its application in May.

Vietnam is the second-largest overseas market for South Korean financial institutions after the United States, with 55 offices supporting more than 10,000 Korean businesses and serving a community of approximately 200,000 South Koreans residing in the country.

South Korea has nine bank branches in Vietnam, including Shinhan Bank, Woori Bank, KEB Hana, and Lotte Card.