With the growth rate of more than 50 percent/annum and the expected scale of Vietnam consumer finance market at 1,000 trillion dong in 2019, banks are seeking for ways to own finance companies.
*More banks to have finance companies
Vietcombank plans to establish a consumer finance company after selling part of its financial leasing company. To ensure capital divestment roadmap under the regulations in Circular No.36/2014/TT-NHNN, recently, Vietcombank has divested more than 10.9 percent stake from Cement Finance Company (CFC).
Similarly, ACB intended to acquire a finance company to promote consumer loans and the market used to have the information that ACB would acquire Post and Telecommunication Finance Company. However, recently, SeABank has won the bid to acquire Post and Telecommunication Finance Company at 710 billion dong.
Meanwhile, Nguyen Dinh Tung, CEO of OCB said this bank plans to acquire or newly establish a consumer finance company this year.
In fact, after completing deal and changing brand, many banks have quickly sought foreign strategic partners to sell. Among successful deals between finance companies and foreign investors over the last period, most foreign partners hold high ownership rate, amounting to 49 percent.
*Looking forward to sell to foreign partners
Many banks are considering attracting foreign investors into directly owned finance companies
After merging with Vinaconex-Viettel (VVF), SHB changed its name into SHB Finance with the chartered capital of one trillion dong. According to SHB leaders, after announcing to set up a consumer finance company, many partners from Europe, America, and Japan have questioned about the share purchase. The bank’s management board is considering choosing an investor from Europe to be strategic partner.
SHB leader added that the participation of foreign strategic partner not only helps the company have experience in managing, selling products but also contributing significantly to the capital surplus for SHB shareholders.
Currently, among finance companies that are directly under banks, FE Credit has not been sold to foreign partners. FE Credit has been considered as the “chicken laying golden egg” for VPBank over the last many years, especially when in 2017, it contributed more than 51 percent to this bank’s profit. That is also the reason why Nguyen Duc Vinh, CEO of VPBank said the bank does not rush selling FE Credit’s stake to foreign partners.
Similarly, since the acquisition of Vietnam Textile and Garment Finance JSC (TFC) in 2015, Maritime Bank still has not had any move to seek for foreign partners.
Meanwhile, in spite of having more than 10 years of experience operating in Vietnam consumer finance market, Prudential Vietnam still decides to sell to foreign partner. Shinhan Financial Group (South Korea) has just announced to reach an agreement to purchase Prudential Vietnam Finance Company for nearly $151 million.
Techcombank has just transferred Techcombank Finance Company (TechcomFinance) to South Korean partner i.e. Lotte Card. The value of this deal is about 87.5 billion won, equal to 1.7 trillion dong. Or, HDBank also transferred 49 percent stake of the finance company directly under HDFinance to Credit Saison Group (Japan).
Dr Dinh The Hien, bank expert said consumer credit will continue booming in the near future when consumers have got used to and realised the benefits of this form.
The role of consumer finance is undeniable. However, in order for this market to develop healthily and professionally, there still needs to have a proper look about the role of finance company from consumers. This is also the reason why consumer lending segment has become an attractive field and finance companies are “hunting for” by foreign investors.
