A series of deals were on negotiation
The wave of parent banks seeking foreign strategic partners to sell off the capital at financial companies, financial leasing once again became a trend in 2020. Earlier this week, the Board of directors of Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) approved the transfer of 49 percent of the VietinBank Leasing’s capital to Mitsubishi UFJ Lease & Finance (Japan) and one percent of the capital for a domestic investor.
VietinBank leaders said that in the near future, they would coordinate with the transfer partners to prepare the documents and seek the approval of the competent authority for the conversion of the legal form of VietinBank Leasing. The sale of shares to Japanese partners was expected to help VietinBank Leasing makeover after a long period of inefficient operation.
Before VietinBank, since 2016, Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) had sold 49 percent of BIDV Financial Leasing Company to Sumitomo Mitsui, launched BIDV SuMi TRUST Financial Leasing Company. As for the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), the bank still owned a finance leasing company with 100 percent capital.
Several banks also announced that they were negotiating to sell off shares at their consumer finance companies to foreign partners. Accordingly, Vietnam Prosperity Joint-Stock Commercial Bank (VPBank) sold off its stake in FE Credit, Saigon Hanoi Commercial Joint Stock Bank (SHB) sold its stake in SHB Finance, Vietnam Maritime Joint Stock Commercial Bank (MSB) divested from FCCOM.
Ngo Chi Dung, Chair of VPBank’s Board of directors, said that over the past time, VPBank’s Board of directors had negotiated with many investors about the sale of a part of FE Credit capital, with positive results. Although negotiations were stalling due to the epidemic, this process would continue soon, as FE Credit was the most attractive company in the consumer finance industry.
Do Quang Hien, Chair of SHB Board of directors, also said that this was the right time to sell shares in SHB Finance. Before merging with SHB, the company had a good financial background, after three years of merger, there recorded positive business results, such as total assets estimated at nearly 5.2 trillion dong, the network spread across 34 provinces and cities.
This was a good time for SHB to divest from foreign strategic investors, Hien said, the selling price would strive to be most beneficial to shareholders. The Chair also said that the process of negotiating with foreign partners was underway, the deal was likely to be successful in 2020.
At the MSB general Meeting of Shareholders in 2020, the bank’s leader said there were negotiations to transfer a part of FCCOM’s charter capital to Hyundai Card Limited Company. Since the end of 2019, MSB had submitted documents to the State Bank of Vietnam (SBV) to approve the transfer of shares following regulations.
Sell to be stronger
Divestment in financial companies, financial leasing did not mean that banks intended to withdraw from these areas. FE Credit accounted for more than 50 percent market share among 16 consumer finance companies in the market. Profit brought by the company accounted for 44 percent of VPBank’s profit.
Ngo Chi Dung, VPBank’s Chair, said that if selling 49 percent capital at FE Credit, the benefits of the parent bank would be reduced. Nevertheless, new partners, with substantial capital, modern technology, would make the company thrive. Not to mention, the capital surplus brought from the deal helped the parent bank increase its capital and its operational scale, as well as promote lending to areas with good profitability.
Meanwhile, in the case of SHB, Do Quang Hien affirmed that the sale of SHB Finance to foreign partners would bring efficiency to both the parent bank and its subsidiaries. The selling rate would follow the regulations, but yes, SHB would choose partners that were likely to resonate with SHB, Hien said.
In fact, not only SHB, MSB, VPBank wanted to continue to hold 50 percent of capital in consumer finance companies, but many other banks, when conducting M&A, also retained 50 percent of capital in financial companies, such as Military Commercial Joint Stock Bank (MB), HCM City Development Joint Stock Commercial Bank (HDBank).
Vu Thi Hai Phuong, vice Chair of MB Board, cum Chair of the Board of directors of Mcredit, said that, according to the bank’s orientation, Mcredit was identified as one of the main pillars of future profits.
Previously, many banks had repeatedly announced their intention to encroach on this field, such as Asia Commercial Joint Stock Bank (ACB), Tien Phong Commercial Joint Stock Bank (TPBank), Orient Commercial Joint Stock Bank (OCB).
Banking experts said that although the consumer finance market was very competitive, the market volume was still substantial, the market share was still attractive, so many foreign investors wanted to take part in, especially the investors from Japan, Korea.
