Vietnamese banks eye East Asian partners

Vietnamese banks eye East Asian partners

Of the foreign financial groups expressing their wish to become shareholders of Vietnamese banks, the Japanese have proven to be the best candidates.

Previously, Vietnamese banks were inclined to seek strategic shareholders among investors from the US and Europe, who had experience, modern technology and powerful financial capability.

However, analysts say, Vietnamese bankers have changed their minds. Since 2008, when the global financial crisis broke out, Europe and the US have become less attractive. Financial groups in those countries have had to focus on overcoming the crisis, rather than considering outside investment.

In addition, the general director of a HCM City-based commercial bank believes that the US and European financial groups are not the most suitable partners for Vietnam in terms of business culture.

He said this was why more and more Vietnamese bankers are eyeing partners from East Asia, especially Japan.

Dau tu chung khoan has quoted its sources as saying that more than half of the Vietnamese banks which have foreign investors have sold stakes to Japanese. The sources said the similarities in cultures and development strategies have brought Vietnamese and Japanese together.

A senior executive of Sacombank, one of Vietnam’s biggest banks, said Japanese banks focus on retail banking, which is also a business strategy that many Vietnamese banks are pursuing.

Thoi bao Kinh te Saigon in late 2013 reported that HD Bank, a bank in HCM City, was negotiating the sale of up to 30 percent of its stakes to Japanese investors.

Regulations require that one foreign investor can hold 20 percent of a bank at maximum, so the 30 percent stake must be sold to at least two Japanese shareholders.

A senior executive of Sacombank also revealed that the bank was considering selling 15 percent of its stakes to investors from Japan.

Last year, a series of major deals were successfully made in which large volumes of shares were transferred to Japanese financial institutions.

In late 2012, Vietinbank sold 12.8 percent of its shares to Bank of Tokyo Mitsubishi UFJ Ltd (BTMU). And Vietcombank sold 15 percent of shares to Mizuho, while Eximbank sold 20 percent to Sumitomo Mitsui Banking Corporation (SMBC).

More deals between Vietnamese banks and Japanese partners are expected to be made in the days to come. Vietnamese banks, which are undergoing restructuring, both on a voluntary and compulsory basis, are seeking foreign partners.

A senior official of the State Bank of Vietnam said most banks are considering selling 20 percent of their shares, the highest ratio of shares a foreign shareholder can hold. And they are paying special attention to candidates from Japan.

Japan Times in November 2013 cited the Recof Corporation, a consultancy firm, as reporting that 75 merger &acquisition deals were successfully made by Japanese companies in South East Asia in the first 10 months of 2013, higher than the previous record-high of 72 deals in the first 10 months of 2011.

vietnamnet