Wednesday, 16 Jan 2019

Commercial banks resume M&A plans

Updated at Thursday, 17 May 2018, 17:36
The Hanoitimes - More domestic banks have once again mentioned to merge and acquisition (M&A) plans at this year’s annual general meetings of shareholders after a long time kept it quite.
Shareholders of PGBank and HDBank agreed a merger plan
Shareholders of PGBank and HDBank agreed a merger plan
At the annual general meeting (AGM) last month, all of PGBank’s shareholders agreed on a plan to merge PGBank and HDBank, while 94.3 percent of shareholders agreed to do so for HDBank. The merger of two banks will start soon, with share conversion in July and the merger wrapped up in August.
The plan was a surprise as CEO of MBBank Luu Trung Thai in March said that MBBank was still considering banks for the plan, including PGBank, when being asked about the bank’s M&A plan. As PGBank decided to merge with HDBank, MBBank will have to look for another partner.
At this year’s AGM, LienViet Post Bank also said that it was considering raising charter capital, restructuring shareholders, completing an M&A, and restructuring credit institutions as requested by the State Bank of Vietnam.
VietinBank, one of the biggest domestic banks, after canceling its plan on admitting PG Bank, has said that a M&A plan with another bank is quite possible if it is a good opportunity for the bank to further grow.
Asked about the failure to admit PG Bank, VietinBank’s CEO Le Duc Tho said the negotiation process lasted too long, while the market performance changed rapidly and the two sides could not reach an agreement.
VPBank has also said it wants to raise charter capital to prepare for M&A deals and other business plans.
Besides, large banks are also considering seeking foreign capital to complete capital increase plans. BIDV, for example, is preparing to sell 15 percent of shares to KEB Hana from the Republic of Korea.
Vietcombank’s plan on selling 10 percent shares to foreign partners has so far also received approval from the government.
Most foreign investors who are interested in the offering of Vietnamese banks are “shark investors” such as GIC, Dragon Capital, VinaCapital, Deutsche Bank AG, Deccan, JPMorgan Vietnam Opportunities Fund, CAM Bank, Clermont, Charlemagne and PYN Elite.
Recommending investors about the way to participate in Vietnam financial market, representative of Lee & Ko Law Firm (South Korea) said Vietnam financial market is quite potential while the application for license to establish a bank is very difficult.
Therefore, purchasing shares or acquiring 100 percent stake in ailing banks is the best opportunities for investors.
Commenting on foreign investment wave into banking sector, Dr Can Van Luc, economic expert said Vietnamese banking sector now is getting much better than the previous time, so the fact that foreign investors are interested in is understandable.
In another perspective, domestic banks themselves cannot afford to raise capital as before because since 2018, a series of new regulations of the State Bank have come into effective.
Accordingly, many CAR targets are tightened, and the cash flow to purchase bank shares is also monitored, to ensure the money used to purchase bank shares is real.
The increasing wave of domestic investment in financial institutions mainly derives from the restructuring policy for financial institutions of SBV. Up till now, there have been six M&A deals among domestic commercial banks and Vietnamese financial institutions.
However, most commercial banks’ M&A deals were with domestic enterprises, except for MBBank, which dealt with Japan partners, and HDBank, which acquired a French-invested company in Vietnam. Thus, commercial banks are now looking for foreign strategic shareholders and the amount of stakes sold may be up to 49 per cent.
Minh Tam
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