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Breakthrough M&A deals expected in banking and finance
Many large deals are on the horizon in mergers and acquisitions (M&A) in banking and finance in 2022, with transaction values of billion of dollars.
Early in the first quarter of 2022, VPBank plans to sell a 15 per cent stake to an undisclosed partner. The Board of Directors of VPBank expect to acquire approximately VND30 trillion ($1.3 billion) from the deal, which is equal to the deal with VPBank and FE Credit.
Previously, in late October,VPBank announced the completion of the sale of a 49 per cent stake in its consumer finance arm FE Credit by SMBC Consumer Finance Co., Ltd. (SMBCCF), a wholly-owned subsidiary of Japan’s Sumitomo Mitsui Financial Group Inc. (SMBC Group). The deal cost $1.4 billion, a record M&A transaction in the sector.
Besides, there may be another billion-dollar deal involving Vietcombank next year, which plans to offer 6.5 per cent of its charter capital for sale. The bank would acquire VND30 trillion from the sale.
BIDV also plans to offer 8.5 per cent of its stake to earn VND15 trillion ($652.17 million) from the deal. However, to date, it has yet to disclose details of its plans.
A series of banks are looking for strategic partners via issuing shares, such as SHB, OCB, NamABank, SCB and LienVietPostBank.
Pham Van Thinh, general director of Deloite Vietnam said that when the pandemic is controlled, the M&A transaction will be recovered. Despite the banks’ increasing risk of bad debts, their business results are encouraging, thus the banking sector is still attractive for foreign investors.
Meanwhile, although deals this year were not large, they still created highlights with their great value, such as the above VPBank deal.
In consumer finance, in late August, Saigon-Hanoi Commercial Joint Stock Bank (SHB) signed agreements to transfer charter capital at SHbank Finance to Bank of Ayudhya in Thailand, commonly known as Krungsri – a strategic member of Mitsubishi UFJ Financial Group (MUFG).
Accordingly, when the two parties fulfil the conditions 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 per cent of SHB Finance’s charter capital to Krungsri and will continue to transfer the remaining 50 per cent after three years.
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