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Facing big difficulties, securities companies considering M&A deals
In the current economic conditions, it seems to be impossible for securities companies to arrange enough of the VND 300 billion in legal capital to be eligible to provide all kind of services, while it is out of reach to seek strategic partners.
That explains why a lot of new securities companies, which have a small scale, are considering merger and acquisition (M&A) deals. Meanwhile, big companies are also considering purchasing small companies which allow them to restructure, change operations, and chartered capital.
Doan Van Minh, General Director of Hai Phong Securities Company (HPC), said that HPC is negotiating with several small securities companies to purchase the companies. Explaining the purpose of the deals, Minh said that this allows using the network of clients and current relations of the partner companies and allows raising chartered capital more easily.
However, Minh admitted that he is facing some problems in negotiations. “The companies we choose have not been ready for the sale, while the companies which are ready for the sale are not our top choices,” Minh said.
Another problem which may hinder the M&A is that to date, the State Securities Commission is just drafting the circular guiding the purchase, sale and M&A of the securities trading institutions. Meanwhile, it remains unclear where the official legal framework is promulgated.
The Director of a big securities company which has the capital at over VND 300 billion, related that it is a good idea to merge with a small securities company which is on the verge of bankruptcy. However, he said that it is necessary to discuss carefully to ensure the interests of involved parties, especially the interests of the investors who have accounts opened at the merged securities companies.
The director said that M&A deals will bring benefit to many parties. Big securities companies can expand their client networks, small companies can avoid bankruptcy, and investors can avoid risks.
However, Le Ho Khoi, Chairman and General Director of Trang An Securities Company, said that if investors hear that the securities companies at which they have transaction accounts are on the risks of being swallowed, they will close the accounts and open other accounts at other companies. Therefore, Khoi said that securities companies would be wrong if they think that they can expand the client network with M&A deals.
Khoi believes that weak securities companies should be dissolved rather than getting merged into bigger ones. He went on to say that one would think M&A is a simple thing, but it is not so easy to carry out M&A, at least because there has been no precedent for it in Vietnam.
Besides the several companies which intend to purchase smaller ones, other companies said that they do not have any purchase plan.
Ha Huy Toan, General Director of Agribank Securities Company (Agriseco) said that the company has not thought of purchasing or merging with any other companies.
Toan said that the state management agencies should have foreseen everything when they licensed too many securities companies.
He added that it would be a very difficult, but feasible deal if big securities companies save small companies. However, it will be unfeasible for two small securities to merge into each other to form up a weak body.
Toan believes that with the current scale of the market, thirty securities companies would be a reasonable figure, while there are nearly 100 operational securities companies.
Le Thi Mai Linh, Deputy Chairman of SeAbank Securities Company, said that securities companies now have to rescue themselves, let alone rescuing others. Linh said that M&A has become very popular in the world and the method proves to be very effective. However, M&A in Vietnam remains relatively a new concept which still lacks a clear legal framework.
Other securities companies like Viettinbank Securities Company and Thang Long also said that they have not had any plan on purchasing or merging into other companies.
Nguyen Thanh Ky, Secretary General of the Vietnam Association of Securities Business (VASB), also said that doing M&A with securities companies proves to be really a complicated process.
Regarding the new way of operation for securities companies, Ky said that the small companies should cut some services, while big companies should provide new services to develop clients. Ky still believes that state management agencies should give securities companies more time so that they can increase capital to be eligible to provide main services.
VietNamNet, DTCK
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