Vietnam clears decks for foreign acquisition of weak banks

By Vien Thong   August 9, 2018 | 06:48 pm PT
Vietnam clears decks for foreign acquisition of weak banks
People pass a branch of Ocean Bank located at the PetroVietnam's building in Hanoi. Photo by Reuters
Vietnam will allow foreign investors to fully acquire weak banks, says Deputy PM Vuong Dinh Hue.

The government would sell banks it has acquired to foreign investors based on the Law on Credit Institutions, he told a forum on mergers and acquisitions held in HCMC on Wednesday.

On the list are Oceanbank, Vietnam Construction Bank, and Global Petro Commercial Joint Stock Bank.

Many investors have expressed interest in this new policy, he said.

Vietnam will also limit or possibly stop issuing new licenses for the establishment of 100-percent foreign owned banks in the country, Hue said.

The restructuring of the financial-banking industry has helped reduce its bad debts from 10.08 percent in early 2016 to 6.9 percent last June, and the government continues to encourage the acquisition of small banks and credit institutions by large banks.

“The number of credit institutions in Vietnam is still too high and we need to restructure the system,” Hue said.

The government plans to let the Vietnam Bank for Agriculture and Rural Development (Agribank), the only 100 percent state-owned lender, launch an initial public offering next year.

The Bank for Investment and Development of Vietnam JSC (BIDV) and Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) will further sell state stakes.

The banking-finance sector accounted for 4 percent of the total M&A value in Vietnam last year, which stood at $10.2 billion, the highest ever.

In the first half of this year that ratio climbed to 19.06 percent out of $3.55 billion.

A major M&A deal announced in the first seven months of the year is Warburg Pincus’s acquisition of stakes in Techcombank, one of Vietnam’s largest private lenders.

A bank announcement in March said two separate legal entities managed by the global private equity firm, which focuses on growth investing, will invest over $370 million in the bank.

South Korea’s Shinhan Bank Vietnam last year acquired the retail business of ANZ Vietnam in the latest move to secure new growth engines in the emerging Asian market.

Earlier Shinhan Financial Group said its subsidiary, Shinhan Card, had completed the acquisition of Prudential Vietnam Finance.

Vietnam has nine wholly-owned foreign banks, four state-owned banks and 31 joint-stock banks.

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