Bank M&A deals to reach target

10:15 | 16/05/2015 Finance - Banking

(VEN) - The State Bank of Vietnam (SBV) has drastically implemented the restructuring project of the banking sector with a focus on mergers and acquisitions (M&A) deals. The goal of completing M&A deals in the banking sector in June 2015 is being realized.

Bank M&A deals to reach target

Photo: Can Dung

The M&A deal between the Southern Bank and the Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) was officially adopted at the annual general meeting on April 20. Together with M&A deals between the Maritime Commercial Joint Stock Bank (Maritime Bank) and the Mekong Development Joint Stock Commercial Bank (MDB), the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and the Mekong Housing Bank (MHB), the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) and the Petrolimex Group Commercial Joint Stock Bank (PG Bank), this was the fourth official deal in the banking sector.
A number of M&A deals have also been approved by the SBV such as the Saigon Bank for Industry and Trade (Saigonbank) and the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), NamABank and Eximbank, ABBANK and DongABank. In particular, the Ocean Bank is more likely to be merged into VietinBank as a number of leaders have moved to the Ocean Bank to support management and operations.
According to the National Financial Supervisory Commission (NFSC), M&A deals in the banking sector would contribute to changing the rank and market share of commercial banks. A review of the NFSC is completely possible as four announced M&A deals show their advantages in terms of the operational network, capital, total assets, the number of customers and service development ability. For instance, MHB will help BIDV develop customer network in the Mekong Delta or VietinBank is able to improve financial capacity towards the goal of becoming a commercial bank with scale and competitiveness in equivalence with regional banks. VietinBank Chairman of the Board of Directors Nguyen Van Thang said that the M&A deal between VietinBank and PG Bank has brought huge benefits as VietinBank’s total assets and chartered capital will increase by VND25 trillion and VND3 trillion, in addition to an increase in the number of transaction offices and bank branches.
Financier Nguyen Tri Hieu said that M&A deals between small and large commercial banks are suitable with international practices, contributing to forming a number of financial institutions at a higher level in order to compete with regional banks.
The SBV’s goal is to have around 20 banks in the whole system and this goal is being realized. However, M&A deals must ensure transparency towards a healthy banking system, contributing to improving capital capacity and administration.

To achieve higher efficiency for M&A deals in the banking sector, commercial banks need to make greater efforts and the SBV needs to adopt strategic directions. Nguyen Tri Hieu proposed that the SBV must closely direct commercial banks in M&A deals to help them ensure sustainable development and improve financial capacity and competitiveness.

                                                                                                                                                                               By Duy Minh