SHB sets to transfer 100% of capital in SHB Finance to Krungsri
On August 25th, 2021, Saigon - Hanoi Commercial Joint Stock Bank (SHB) signed agreements to transfer charter capital at SHbank Finance Company Limited (SHB Finance) to Bank of Ayudhya in Thailand, (SET: BAY), commonly known as Krungsri – a strategic member of the Mitsubishi UFJ Financial Group (MUFG).
Accordingly, when the two parties fulfil the certain conditions and meet the requirements as prescribed by law and obtain the approval of the State Bank of Vietnam as well as relevant regulatory agencies of Vietnam, Thailand, and Japan, SHB will transfer 50% of SHB Finance's charter capital to Krungsri and will continue to transfer the remaining 50% after 3 years.
The transfer agreement of SHB Finance will bring a significant capital surplus to SHB's shareholders as well as improve the financial capacity and SHB’s reputation. The strategic cooperation between the two banks of the scale and position of Top 5 in Vietnam and Thailand will open up opportunities for regional development and reach out to the world.
Attractions of the potential consumer finance market
Not only helping the economy gets more effective credit, contributing to the development of Vietnam's financial system in promoting non-cash payments, but consumer finance companies also help people access to easier sources of official loans, join hands to repel black credit.
In more than 10 years of development, Vietnam's consumer finance has increasingly shown its potential and has a lot of room for growth with a population of more than 98 million people, a young population with an average age of 32.9 years. Consumer credit outstanding at the end of 2020 is about VND 1.8 million billion, accounting for about 20% of total outstanding loans of the economy, 2.5 times higher than 2012. In 2021, many experts forecast demand for consumer credit is likely to continue to grow strongly, possibly by about 13-15%.
This is the reason why in the past, many domestic banks have repeatedly revealed their plans to "hunt" and acquire financial companies. Meanwhile, foreign investors also showed special interest in Vietnam's consumer finance market. And certainly, mergers and acquisitions in this sector will be exciting in the coming time.
SHB in strategic cooperation with Krungsri: A development opportunity with regional and global outreach
Being in the top 10 consumer finance companies in Vietnam, SHB Finance is evaluated with a lot of growth potential and strengths, with a charter capital of VND 1,000 billion, 100% owned by SHB Bank - one of the licensed companies with the highest charter capital in the market.
After negotiation, on August 25, 2021, SHB signed agreements related to the transfer of charter capital in SHB Finance to Krungsri - a strategic member of MUFG. Accordingly, when the two parties meet the requirements as prescribed by law and obtain the approval of the State Bank of Vietnam and relevant regulatory agencies of Vietnam, Thailand, and Japan, SHB will transfer 50% of SHB's charter capital Finance to Krungsri and will continue to transfer the remaining 50% after 3 years.
Krungsri is the fifth largest financial group in Thailand in terms of assets, loans, and deposits in which Mitsubishi UFG Financial Group (MUFG) holds 76.88% of the capital. MUFG is the Japan’s largest financial group and one of the world’s largest financial organizations. MUFG also has a lot of experience in operating in the Vietnamese market, holding 20% of strategic shares in a large domestic bank in Vietnam and has contributed to the bank's impressive development in the Vietnamese market in recent years.
In Thailand, Krungsri provides a comprehensive range of banking, consumer finance, investment, asset management, and other financial products and services to individual consumers, SMEs, and large corporations through 656 branches and transaction offices in Thailand, meeting all needs of customers and society with sustainable growth.
Mr. Do Quang Hien - Chairman of the Board of Directors of SHB said: “The consumer finance market in Vietnam has great potential and room for growth. SHB Finance is a “beautiful girl” with healthy financial health. After a period of selection and negotiation, we have found a suitable partner to contribute to bringing synergistic value in many aspects such as management experience; technology; improve financial capacity; network expansion, and new product development, international cooperation, enhancement of SHB’s reputation and brandname in the region and in the world.”
Krungsri President & CEO Seiichiro Akita said, "We are very pleased to announce that we have signed agreements with SHB to acquire a 100% stake in SHB Finance, SHB’s consumer finance subsidiary, upon closing of the transaction after all regulatory approvals are obtained. SHB’s local expertise and an extensive network in Vietnam complemented by Krungsri’s strength in consumer finance will enhance SHB Finance’s business competitiveness. Together, we will develop and deliver quality consumer finance products to customers in Vietnam. This milestone also underscores our commitment to ASEAN Expansion Strategy following our current medium-term business plan covering 2021-2023.”
SHB and Krungsri are both banks with a large network of branches and transaction offices in Vietnam, Thailand and Southeast Asia, commensurate in terms of position and potential. With strengths in consumer finance, especially experience in Digital Banking and Fintech, Krungsri will resonate with SHB to break new goals, create different products, transform strongly, and digitize to create convenience and provide the best service to customers. Both sides commit to contribute to promoting the growth potential of Vietnam's consumer finance market, bringing greater value to customers, shareholders and partners.
In particular, with a vision to be Top Retail Banks, SHB and Krungsri both expressed their desire to combine their comprehensive ecosystems apart from the consumer finance business.