More bank M&A deals expected in second half of 2014

VietNamNet Bridge – Although only one merger & acquisition (M&A) deal was announced in the first few months of the year, more are expected in the second half of the year.

A series of banks announced their M&A plans in the beginning of the year. These included Maritime Bank, MDB, Sacombank, Southern Bank, PGBank, Viet A Bank, VietCapital Bank, SHB and VPBank.

However, only the deals of merging banks and finance companies have been proceeding. VPBank has received official approval from the State Bank for its plan to admit Vinacomin Finance Company.

SHB plans to consult with shareholders on the issuance of shares as a step to admit a finance company later this month.

Maritime Bank has obtained Vinatex Finance Company after buying 64.1 percent of the company’s chartered capital from Vinatex, the holding company.

Meanwhile, some of the banks’ planned merger deals have not got the nod from the watchdog agency. The deals of Maritime Bank merging into MDB, or Southern Bank into Sacombank, for example, are still on the table of the State Bank’s leaders, though the M&A plans have been approved by shareholders.

As for other cases, it is still unclear if PG Bank will merge into VietinBan, or who the parnters of Viet A Bank and VietCapital Bank would be.

Dau tu quoted its sources as saying that the M&A plans of Maritime Bank and MDB, Sacombank and Southern Bank are being examined by the State Bank. The banks, in fact, still need more time to improve before they are officially merged.

The sources said at least one of the two deals would get the go-ahead from the State Bank by the end of the third quarter of the year.

Governor of the State Bank of Vietnam Nguyen Van Binh, while admitting that the bank restructuring process has slowed down, said that the State Bank needs to draw up legal documents to speed up the settlement of bad debts.

Dr. Vo Tri Thanh, deputy head of the Central Institute of Economic Management (CIEM), commented that merging is the best option for cross-ownership banks (banks holding each other’s shares), like Maritime Bank and MDB, saying that in the current difficult conditions, bankers need to gather strength to develop their core business instead of scattering money into too many different businesses.

Binh of the State Bank also said the M&A market would be even more bustling in the upcoming six months.

“Only small banks have been restructured so far. But in the next few months, big banks will undergo restructuring as well,” Binh said.

As such, Saigon Dau tu quoted some banking experts as saying that the “elder brothers” in the banking systems like BIDV, VietinBank and Vietcombank would also join the “M&A game”.

Dang Xuan Minh, Director of AVM, a consultancy firm, noted that foreign investors have shown great interest in bank M&A deals.

“The banks with create financial capability and advantages in consumer credit, and card and payment services will be eyed by foreign finance groups,” Minh said.

Kim Chi

MA, merger, banks