More M&A deals in the banking sector next year: local media

Viet Nam’s equity market may witness big merger and acquisition (M&A) deals in 2021 as local banks are trying to lure foreign capital on the country’s participation in international trade deals.

 

Vietnamese banks, especially small-cap ones, are targeting more foreign capital to improve their performances, financial expert Huynh Trung Minh said.

However, the global markets have been hit by the COVID-19 pandemic, so it is difficult for foreign investors to hunt Vietnamese banking shares at the moment, he said, cited by tinnhanhchungkhoan.vn.

So the banks lock their foreign ownership ratios to wait for the opportunities to come and keep their shares from the market volatility, Minh said.

Among those banks making the move was the Viet Nam Technological and Commercial Joint Stock Bank (Techcombank), which capped its foreign capital ratio at 22.5 per cent.

HCM City Development Joint Stock Commercial Bank (HDBank) also decided to curb foreign investors’ ownership limit to 21.5 per cent from 30 per cent in order to attract potential buyers.

Viet Nam Prosperity Joint Stock Commercial Bank also cut the foreign ownership limit by 7.77 per cent to 15 per cent.

Among others, VietCapital Bank and NamA Bank are discussing similar ideas with shareholders.

Techcombank shares (HoSE: TCB) have gained as much as 32.6 per cent since July 30 to touch the six-month high of around VND24,000 apiece.

HDBank shares (HoSE: HDB) and VPBank shares (HoSE: VPB) have respectively increased by as much as 7.7 per cent and 29 per cent in the same time.

According to bank officials, the banks will not sell their shares on the market at any cost and they will select the buyers carefully.

Under Decree 01/2014/ND-CP, a foreign investor cannot own more than 20 per cent of a Vietnamese financial institution and the total ownership among all foreign investors cannot exceed 30 per cent.

Some Vietnamese banks have completed selling stakes to foreign buyers but many of them still have room to welcome overseas investors.

On the other hand, the European Union-Viet Nam Free Trade Agreement (EVFTA) may facilitate European financial firms to penetrate Vietnamese market. One of the key things under the trade pact is European investors may increase their ownership ratios to maximum 49 per cent in two Vietnamese banks.

Those beneficial banks will not include the top four State-controlled banks – Joint Stock Commercial Bank for Foreign Trade of Viet Nam (Vietcombank), Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Joint Stock Commercial Bank for Investment and Development of Viet Nam (BIDV), and Agribank.

That rule now puts private-equity banks, including VPBank, Techcombank, Asia Commercial Joint Stock Bank (ACB) and Viet Nam International Joint Stock Commercial Bank (VIB), at the centre of attention, according to Viet Nam International Securities Co.

Aside from Techcombank, VIB and VPBank – which have locked foreign ownership limits – ACB has run out of room for foreign ownership.

In the last five years, the Vietnamese market has seen more share purchasing deals between foreign investors and local banks.

Foreign investors had done buying shares at Techcombank, HDBank and TPBank before those banks were listed on the stock market.

In November 2019, BIDV sold more than 603 million shares to the South Korean lender KEB Hana Bank for nearly VND20.3 trillion (US$875 million).

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ACB 27,300 100 +0.37%
HDB 22,300 300 +1.36%
TCB 24,500 400 +1.66%
VIB 29,500 1,900 +6.88%
VPB 27,900 1,100 +4.10%

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