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Notable Transactions
On January 17th, DongA Bank and GPBank were mandatorily transferred to HDBank and VPBank respectively, following a plan approved by the Government.
Currently, SCB has been under special supervision since late 2022. After facing numerous challenges, SCB continues to reduce its operational scale, including closing several transaction offices. The bank's operations are being maintained through support measures from the State Bank.
The State Bank is reviewing proposals from several investors interested in participating in SCB's restructuring, aiming to soon submit a restructuring plan to the Government as per regulations.
During the State Bank's press conference in early January 2025, Deputy Governor Dao Minh Tu reported that SCB's situation remains stable, ensuring people's deposits while addressing violations and weaknesses caused by the bank and individuals involved.
The restructuring plan for SCB is being actively developed.
Two banks underwent mandatory transfer in early 2025.
Previously, in mid-October 2024, Vietnam Construction Bank (CB) and Ocean Bank were officially transferred to Vietcombank and MB respectively. This marked the first time such special M&A transactions occurred in Vietnam.
Also in early 2025, SeABank completed the transfer of 100% shares of Post and Telecommunication Finance Company (PTF) to AEON Financial Service Co., Ltd. (AEON Financial) - a member of Aeon Group (Japan).
This was a major acquisition in the consumer finance sector with a total value of 4,300 billion VND, completed after more than a year since the share transfer agreement was signed between the two parties in October 2023. This transaction marked a significant step forward in SeABank's strategy to enhance its financial capacity and expand its position in retail banking.
Additionally, Bank of Ayudhya Public Company Limited (Krungsri) from Japan proposed to acquire the remaining 50% stake in SHBFinance to own 100% of the company. This move attracted attention as major global banks continue to seek investment opportunities in the Vietnamese market.
Meanwhile, the most anticipated M&A deals this year involve billion-dollar capital sales from Vietcombank and BIDV. Although both banks announced these plans at their 2024 Annual General Meetings of Shareholders, they had to postpone due to unfavorable market conditions.
According to a report from MB Securities Company (MBS), both Vietcombank and BIDV have decided to postpone their share issuance plans to 2025. Earlier, Vietcombank's leadership stated that the bank is working closely with international consultants and expects to complete this transaction in the first half of 2025.
Currently, the number of domestic banks with foreign strategic shareholders remains quite limited, including VietinBank (with MUFG Bank), BIDV (with KEB Hana Bank), Vietcombank (with Mizuho), VPBank (with Sumitomo Mitsui Banking Corporation), and OCB (with Azora Bank). Banks without foreign strategic shareholders, such as Nam A Bank and LPBank, are actively negotiating with potential partners to find suitable investors, with notable deals expected to take place in 2025.
What drives bank M&A?
Economic expert Dinh Trong Thinh suggests that executing transfer deals for weak banks is necessary to protect depositors' interests and create opportunities for stronger banks to take over and restructure these institutions. This approach helps make Vietnam's banking system more stable and sustainable. The consolidation of weaker banks with stronger ones through M&A activities not only strengthens the overall banking sector but also enhances the quality of financial services available to customers.
According to the Law on Credit Institutions 2024, which takes effect from July 1, 2024, the regulations on mandatory transfer of weak banks have been clarified, creating a solid legal framework for implementation. These regulations not only protect the interests of depositors and related parties but also help receiving banks carry out the restructuring process safely and effectively.
According to experts, banks always face pressure to increase their charter capital because they must continuously meet credit growth requirements. In principle, if credit growth is in single digits, charter capital must also increase at least proportionally. Therefore, experts consider raising foreign capital as a crucial step in implementing long-term capital increase strategies. Foreign partners not only help banks supplement their financial resources but also create opportunities to leverage management experience and improve risk management capabilities according to international standards.
A senior official from the State Bank of Vietnam has noted that although the financial health of Vietnam's banking system has improved, the Capital Adequacy Ratio (CAR) of domestic banks remains significantly lower than the regional average. Moreover, in the context of decreasing interest rates and weakening financial health of businesses, raising capital has become more challenging for banks.
Therefore, increasing charter capital is considered a crucial solution to enhance the sustainability and competitiveness of the banking system. However, this activity faces numerous challenges as investment flows from major shareholders into banks are being more strictly controlled to prevent cross-ownership and manipulation of banking operations. The tightening of regulations aims to maintain a healthy and transparent banking environment, ensuring that capital increases genuinely contribute to strengthening banks' financial positions rather than serving individual interests or creating complex ownership structures that could potentially harm the banking system's stability.
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Source: tienphong.vn /31-Jan-2025/ https://tienphong.vn/trong-vong-xoay-mua-ban-va-sap-nhap-ngan-hang-so-phan-scb-se-ra-sao-post1713388.tpo
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