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Bank merger deals expected to mushroom
Merger and acquisition (M&A) in banks will be boosted in the next five years as part of efforts to overhaul the entire banking system and speed up the formation of one to two regional-class commercial banks in Vietnam.
Reality shows in the global economic integration era when economies develop to a level that is likely to go beyond their control, it is essential for every Government to restructure the domestic economy.
In doing so, M&A is widely regarded as an effective tool for the economic restructuring, in which bank restructuring is the top priority.
In Vietnam, M&A activities in the banking sector began after the Government had ordered the restructuring of the commercial bank system and financial institutions via M&A in a “voluntary manner”.
The move targets to stabilize liquidity for new banks; rationalize their operations and improve administrative competence without hampering monetary policies.
The first voluntary M&A deal occurred last December between three unlisted and privately owned banks namely First Commercial Joint-Stock Bank, Tin Nghia Commercial Joint-Stock Bank and Sai Gon Commercial Joint-Stock Bank to bolster their liquidity and cut operation costs.
Recently, the central bank leader signaled that he would speed up the bank restructuring process. It is expected that additional five to eight banks will be merged this year.
Mr. Toshifumi Iwaguchi, Managing Director of Recof affirmed that Japanese investors were extremely interested in M&A deals in Vietnam.
Japan's Mizuho Financial Group agreed to buy a 15 per cent stake in Vietcombank, Vietnam’s largest listed bank, opening up opportunities for more M&A deals between Vietnam and Japan in the coming time.
Experts forecast that there will be more M&A contracts between Vietnamese banks and foreign partners.
Albert Ng, chairman of Ernst & Young China suggested Vietnamese banks consider M&A as good chances for them to improve administrative competence, learn about modern technology and widen scale of services.
Under the Government’s national banking restructuring project, banks are encouraged to merge with other ones or with healthy credit institutions..
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