SSC lets off flare as signal of securities company merger process

SSC lets off flare as signal of securities company merger process

APEC Securities Company has become the first securities company to be merged into others under the plan to restructure the stock market. The decision was made half a year after the plan was approved by the Ministry of Finance.

The securities company process reshuffle begins

The 2012 annual shareholder’s meeting of APEC Securities Company (APS) approved the plan to merge APEC into others. This is the first securities company which has made public the merger plan so far.

While merger and acquisition (M&A) is quite a normal activity of securities companies all over the world, the concept remains a taboo word in Vietnam, where in people’s thoughts, M&A is carried out only when companies incur loss or get dissolved.

Nguyen Do Lang, President and General Director of APS, said on Dau tu chung khoan that a lot of securities companies have to scale down their business and reshuffle to get adapted to the gloomy stock market.

He also said that 100 operational securities companies is too much for a fledgling market like Vietnam, therefore, cutting down the number of securities companies proves to be inevitable. That is the reason why APS plans to merge into other securities companies in 2012.

Also according to Lang, APS now belongs to the group of average grade companies. In the context of the stiff competition, if APS cannot add itself into the list of top 10-15 securities companies holding biggest market shares, the company would face a lot of big challenges. Therefore, APS has drawn up a merger plan, considering this the first step in its strategy to improve the company’s competitiveness.

“The partners of APS could be anyone who have competitiveness and help APS improve its competitiveness after the merger, no matter they are small or big,” Lang said, adding that APS would refuse the big companies with big debts and the market segments coinciding with APS.

Trinh Hoai Giang, Deputy General Director of the HCM City Securities Company, also said that as the stock price has been falling, a lot of companies have incurred big loss. Therefore, scaling down business or merging into each other proves to be the wise moves.

The watchdog agency - the State Securities Commission SSC – has been facing violent criticism from people for the slow implementation of the restructuring. However, SSC’s Chair Vu Bang, in an interview given to Thoi bao Kinh te Vietnam, explained that it is not easy to eliminate securities companies.

“Not only the Ministry of Finance, but SSC’s leadership has also urged relevant departments to cut down the number of securities companies,” Bang said, adding that the merger and acquisition need to be carried out on the voluntary basis in the first phase of the reshuffle process.

To date, SSC has finished analyzing securities companies and classified them into three groups, including the group of companies in normal operation; the group of companies needed the control from watchdog agency, and the third group of companies to be put under the special control.

SSC has released the decision to put seven securities companies under the special control, namely VRG Securities, Vina Securities, Hanoi Securities, Truong Son Securities, Da Nang Securities, Mekong Securities and the Vietnam Industry and Trade Securities Companies.

Also according to Bang, five securities companies have stopped providing brokerage service. In the first six months of 2012, six securities companies belonging to commercial banks were inspected by SSC. It is expected that 20 companies would be inspected in 2012.

However, Bang said that the securities company restructuring process is facing a lot of difficulties.

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