The Commonwealth Bank, the second largest lender in Australia, agreed to buy 20% stake in Hanoi based Vietnam International Bank. Now Commonwealth Bank has become the eleventh foreign bank to buy shares in a Vietnamese lender.

The Commonwealth Bank has already in close association with Vietnam International Bank since past two years as the Australian lender was consulting the VIB in improving its retail banking, credit risk and treasury operations. This move of the Commonwealth Bank is in line with its strategy of expanding business in Asia. The amount of the deal was not disclosed by both the parties.

According to the joint statement released by the two banks, the Commonwealth Bank of Australia is initially acquiring 15% stake in VIB for an undisclosed sum. VIB said that Commonwealth Bank could acquire a total of 20% stake in Vietnamese lender by the end of year 2011.

Vietnam International Bank, founded in 1996, currently has 117 branches and 400000 customers in Vietnam. The bank is one of the eight leading joint stock banks (JSBs) now operating in the country. Based on its share price, VIB was valued at $235.2 million.

The Commonwealth Bank expects the demand for financial services in Vietnam to increase significantly in the coming years.