M&A in banking sector perking up for 2017
M&A in banking sector perking up for 2017
The year has only begun, but signs are pointed to an exciting time ahead for the banking sector with vigorous mergers and acquisitions (M&As) activities.
As approved by the State Bank of Vietnam (SBV), on January 12, Vinaconex-Viettel Finance JSC has been merged into Saigon-Hanoi Commercial Joint Stock Bank (SHB). Within 45 working days, SHB is going to finish business registration procedures in order to set up the SHB consumer finance company with the chartered capital of VND1 trillion ($47 million).
Not stopping there, Nguyen Van Le, general director of SHB, said the consumer finance company will soon merge with a foreign company.
In 2017, at least two more M&As will take place: the merger of PG Bank into VietinBank and Vietcombank’s sale of a 7.73-per-cent stake to Singarporean strategic partner GIC.
Shareholders of PGBank and VietinBank have yet to finish negotiating the deal after two years. However, according to the latter’s chairman Nguyen Van Thang, PGBank’s restructuring plan recently submitted to the SBV stated that the deal will be finished in 2017.
Vietcombank and GIC signed the memorandum of understanding on the stake sale in April last year, but the deal has yet to be closed. Nghiem Xuan Thanh, chairman of Vietcombank, said that the reason is the high price of Vietcombank stocks. Thanh said he hoped to complete the negotiations soon. A source of VIR said that the deal’s value is roughly VND9 trillion ($403.5 million).
With the government’s initiative to restructure the banking system, more banks are expected to join the M&A wave. There will be a lot of opportunities for domestic as well as foreign investors.
At the moment, the SBV has submitted to the government and the Politburo a project to restructure five banks, including three VND0 banks—failing banks that the government bought for VND0—namely CB Bank, GPBank, and OceanBank, as well as DongA Bank and Sacombank.
Earlier, the Asian Development Bank (ADB) announced a plan to cooperate with a Vietnamese company to buy one of the VND0 banks.
Experts said that buying a bank with a broad network in the country already in place is a good choice for a foreign investor who may find it difficult to build a network from scratch.
