Feb 23, 2013

Vietnam - Which banks will be called for M&A in 2013?

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VietNamNet Bridge – TrustBank has “opened fire,” kicking start a new merger and acquisition (M&A) wave in 2013. What are the next?

TrustBank, one of the nine weakest banks, has got the nod from the State Bank of Vietnam to experience a reshuffle process itself. It plans to sell 10 percent of stakes to Thien Thanh Group and 75 percent of stakes to the other 20 shareholders.

Under the restructuring plan, Thien Thanh would pump capital into TrustBank in different periods

Eximbank and Sacombank, the two in the top 10 of the Vietnamese most powerful banks, have unexpectedly announced the merger plan which is scheduled to get completed in 3-5 years. The two have signed a memorandum of understanding on comprehensive cooperation between them, a first step towards the merger process.

Neither Eximbank nor Sacombank are weak banks which must be restructured under the decision by the State Bank. They simply want to unite to become stronger.

What is next? Analysts say they must be the names which were mentioned in 2012 already.

In late December 2012, Western Bank released a notice that the Prime Minister approved the plan on merging the bank into the PetroVietnam Finance Corporation (PVFC).

Even though PVFC then voiced its denial of the information, people still believe that the deal would be wrapped up one day, because “there is no smoke without fire.”

Some sources have said that right after the Tet holiday, Western Bank would organize the shareholders’ meeting to discuss the restructuring, where the merger of the bank would be on the focus.

It’s very likely that Navibank would come next to Western Bank. In 2012, Navibank’s restructuring plan got the approval from the State Bank, and it’s highly possible that Navibank would follow the same way with TrustBank and TienPhong bank.

The other two big names which also plan to carry out an M&A deal this year are HDBank and DaiABank, which want to become more powerful through the merger.

A rumor was spread out in October 2012 that the State Bank of Vietnam agreed on the merger of DaiABank and HDBank, and some sources said HDBank would buy another bank.

Both DaiA and HD once planned to hold shareholders’ meetings to discuss the restructuring, but they both then canceled the meetings.

Analysts say people would not have to wait too long to get the answers to the question about the restructuring, since the State Bank has requested commercial banks to submit their restructuring plans prior to February 28, 2013.

What would happen with GP Bank remains an unknown. It’s still unclear about the method of restructuring to be carried out by the bank. However, it will surely have to kick off the plan in 2013 as instructed by the State Bank.

Besides the banks, some other credit institutions have also sent words intimating that they would carry out M&A deals this year. Vinaconex - Viettel Finance Company has recently stated that it is seeking suitable partners for an M&A which would turn it into a commercial bank. Therefore, analysts have made a wild guess that Vinaconex – Viettel Finance Company would merge into an existing bank.

Some M&A deals went successfully in 2012. These included the ones of SHB and Habubank, the sale of Tien Phong Bank stakes to DOJI group, of Vietinbank to Mitsubishi UFJ.

In 2011, SCB, Tin Nghia Bank and Ficombank merged to form up SCB.

SHB, which took over the unprofitable Habubank, has reported that the bank began making profit in the fourth quarter of 2012. Tien Phong Bank has become stronger with the credit growth rate of 15 percent and the bad debt ratio down to less than five percent. SCB has reported the profit of VND82 billion after one year of operation.


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