Last update 7/24/2012 9:25:02 AM (GMT+7)

What scenario for Bao Viet when HSBC “says goodbye?”

VietNamNet Bridge – Experts believe that it would be much better for Bao Viet if HSBC takes leave of Bao Viet and gives up the place to another partner who is an insurer.

HSBC sounds the retreat from Vietnamese finance group
Reuters last week quoted its sources as saying that HSBC is seeking partners who agree to buy 18 percent of Bao Viet’s stakes from the banking group. HSBC Global has declined to comment about the news.

Meanwhile, Bao Viet seems to be in a passive mode and it had not prepared anything for the separation with the five year partner. Hoang Viet Ha, the spokesman of Bao Viet Group said the group has been very surprised with the Reuters’ news about the capital withdrawal of HSBC. He also said that to date, HSBC has not released any official statement about the capital withdrawal.

“However, if this is really the decision by HSBC, we would respect their decision,” he said.

Reuters has also reported that the partner who is likely to replace HSBC in Bao Viet could be Sumitomo Life, a Japanese insurance group.

Opinions from well informed circle said that over the last five years of cooperation, HSBC and Bao Viet have not received big benefits from each other, and that the appearance of a new partner, who also operates in the insurance sector, could be a good choice.

Pham Ngoc Bich, a senior executive of SSI, a securities company, said HSBC has been giving advices to Bao Viet over the last five years as a partner. However, the advices were focused on the corporate governance and insurance technique rather than insurance products, the distribution strategy or retail banking services – the most important factors for the development of an insurance company.

“HSBC is an international banking group, but it is not a life and non-life insurance group,” Bich said. “I believe that the capital withdrawal by HSBC wouldn’t influence the insurance business of Bao Viet in the short term.”

Meanwhile, HCM City Securities Company (HSC), asserted that HSBC might have disappointed over the last five years because it did not have big influences to the Bao Viet’s business activities.

HSC believes that HSBC has not been satisfactory with its weak influences to Bao Viet’s board of directors and board of management, comparing the case with the capital withdrawal by ANZ from STB because ANZ was not satisfactory about the impacts on the Vietnamese bank.

“Bao Viet and HSBC, we believe, by the nature, do not fit each other, because they are an insurance and a banking group,” HSC has noted. Therefore, the capital withdrawal proves to be a reasonable move for the both sides. It would be better for Bao Viet to choose a partner in the same insurance sector.

In the last five years, Bao Viet shares (BVH) have been considered as the stock with low yield, despite the strong position of HSBC in the market. HSC has predicted that the EPS of the Bao Viet group would drop by 1.9 percent in 2012 when the EPS of the holding company drops by 2.1 percent.

In such circumstances, Sumitomo Life is believed to be a better partner than HSBC for Bao Viet. Sumitomo Life is a big name in the global life insurance industry. Besides Sumitomo Life, any other insurance companies are also believed to bring a brighter prospect to Bao Viet

Though the affair has not been confirmed by HSBC, experts believe that the banking group has been quietly preparing for the withdrawal over the last three years.

Source: Lao dong