SHG Shinhan Financial Group Co Ltd

By Vu Trong Khanh

HANOI--The State Bank of Vietnam said Thursday it has agreed in principle to allow South Korea's Woori Bank (000030.SE) to open a wholly owned unit in the country.

South Korea is among the largest sources of foreign direct investment in Vietnam. Several large Korean companies have set up major production bases in the Southeast Asian country because of its cheaper labor and the free-trade agreements the nation has signed with South Korea and others.

Woori Bank would be the second Korean bank to open a wholly unit in Vietnam, after Shinhan Financial Group Co. (055550.SE), and the sixth foreign lender. The others are Australia & New Zealand Banking Group Ltd. (ANZ.AU), Hong Leong Bank Bhd. (5819.KU), HSBC Holdings PLC (HSBC.LN) and Standard Chartered PLC (STAN.LN).

The central bank said Woori Bank would need to complete the necessary paperwork before receiving a license to open the division, adding that it has approved a list of proposed executives for the unit.

South Korea is Vietnam's third-largest trading partner, with trade totaling $36.6 billion last year, an increase of 31.5% from the previous year, according to official data. Bilateral trade is expected to continue to rise thanks to the countries' free-trade agreement, which came into effect in December.

South Korea's Samsung Electronics Co. (005930.SE) is the largest foreign investor in Vietnam, where it has several factories producing electronics and smartphones. Exports of smartphones, most of which were made by Samsung, totaled $19.45 billion in the first seven months of this year, up 13.4% from a year earlier, and accounted for one-fifth of Vietnam's total export revenue, according to official data.

Write to Vu Trong Khanh at trong-khanh.vu@wsj.com

(END) Dow Jones Newswires

August 04, 2016 00:30 ET (04:30 GMT)

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