Vietnam’s banking industry is expected to see a new wave of mergers and acquisitions (M&As) in the time to come as many commercial banks have so far mentioned M&A plans while foreign investment funds have also shown their large interest in the local financial market.
After a long time being quiet about M&A, many banks recently revealed upcoming plans at their annual general meeting (AGM) of shareholders.
Shareholders of HDBank and PGBank have so far agreed for a merger, which will start soon with share conversion in July and the merger will likely be complete in August.
It is estimated after the merger with PGBank, HDBank will have a charter capital of VND15.35 trillion (US$673 million) and 370 branches and transaction offices throughout 63 cities and provinces nationwide.
The new bank is also due to restructure human resources, network of branches and transaction offices as well as preparing for the establishment of companies operating in financial leasing, remittance and insurance.
At this year’s AGM, LienVietPostBank also said that it was considering raising the charter capital, restructuring shareholders, completing a merger, and restructuring credit institutions as requested by the State Bank of Vietnam (SBV).
VietinBank, one of the biggest domestic banks, after canceling its plan on taking over PG Bank, has said that an M&A plan with another bank is quite possible if it is a good opportunity for the bank to further grow.
Asked about the failure to admit PGBank, VietinBank’s CEO Le Duc Tho said the negotiation process lasted too long, while the market performance changed rapidly and the two sides could not reach an agreement.
VPBank has also said it wants to raise charter capital to prepare for M&A deals and other business plans.
Besides, large banks are also considering seeking foreign capital to complete capital increase plans. BIDV, for example, is preparing to sell 15 percent of shares to KEB Hana from the Republic of Korea.
Vietcombank’s plan on selling another 10 percent stake to foreign partners has so far also received approval from the government.
Most foreign investors who are interested in the offering of Vietnamese banks are “shark investors” such as GIC, Dragon Capital, VinaCapital, Deutsche Bank AG, Deccan, JPMorgan Vietnam Opportunities Fund, CAM Bank, Clermont, Charlemagne and PYN Elite.
Recommending investors about the way to participate in Vietnam financial market, representative of Lee & Ko Law Firm (South Korea) said the Vietnamese financial market is quite potential while the application for license to establish a bank is very difficult.
Therefore, purchasing shares or acquiring 100 percent stake in ailing banks are the best opportunities for investors.
Banking expert Can Van Luc said Vietnamese banking sector now is getting much better than the previous time, so the fact that foreign investors are interested in is understandable.
Industry insiders said that the increasing wave of investment in financial institutions mainly derives from the restructuring policy for financial institutions of SBV. Up till now, there have been six M&A deals among domestic commercial banks and Vietnamese financial institutions.
However, most commercial banks’ M&A deals were with domestic enterprises, except for MBBank, which dealt with Japan partners, and HDBank, which acquired a French-invested company in Vietnam. Thus, commercial banks are now looking for foreign strategic shareholders and the amount of stakes sold may be up to 49 percent.
http://www.hanoitimes.vn/economy/2018/06/81e0c7ee/new-wave-of-m-a-in-banking-industry-on-the-cards/
