Industry insiders are digging into banking
sector restructuring.
Addressing the 13th National Assembly’s
ongoing second section, Prime Minister Nguyen Tan Dung asserted re-arranging
commercial banks, credit and financial institutions in the direction of
expanding their scope in a rational manner and trimming feeble banking and
credit entities was one of core tasks in 2012 and the following years.
The State Bank in respect to banking sector
restructuring also assumed bank mergers and consolidation would yield bigger
added value as banks could grow in scope.
Supportive of that idea, former State Bank
governor Cao Sy Kiem said no bank could stay out of the restructuring and it
was essential to properly point out bank’s impediments.
Standard Chartered Vietnam general director
Louis Taylor assumed merging two small underperformed banks may not always
result in a big stronger bank. A bigger feeble bank may come into existence
instead.
According to industry experts, a number of
factors were involved in successful mergers and acquisitions (M&A),
specifically in the banking sector.
National Financial Supervisory Committee
deputy chairman Ha Huy Tuan said making comprehensive appraisals of actual bank
performance was vital to draw M&A plans in details.
“Hooking into M&A while banks’ strong and
week points are not made clear is like making descriptions and giving drugs
when the cause of illness remains unknown,” said Tuan.
The tie-up between Lien Viet Bank (LVB) and
Vietnam Post Corporation (VNPost) to form Lien Viet Post Bank in mid 2011 shows
that knowing each other advantages and disadvantages has entailed the deal’s
success.
LVB wanted to become a retail bank but it is
juvenile with a modest network. By taking over VnPost’s indebted Vietnam Postal
Saving Company (VPSC), LVB could make use of the latter’s nationwide postal
saving outlet network, meanwhile VnPost, through the deal, procured margin
figures quadrupled VPSC’s book value and stamp out the postal saving firm’s
bankruptcy fears.
According to State Bank expert Dao Minh Tu,
Vietnam had developed a consistent legal corridor for M&A activities and
the LVB-VnPost deal with its particular steps could serve as a useful reference
for those wanting to climb onboard the M&A ship.
The Lien Viet-VnPost is also the single deal
until present between a local bank and a local business entity.
Sorting suitable M&A models is also of
paramount importance. In this regard, the process would yield better outcomes
if the parties involved hooked into M&A on a voluntary basis instead of
being forced to do so by competent state bodies, said Tu.
Huy Hao | vir.com.vn
As of October 2011 Vietnam was home to nine
M&A cases in the banking field with eight of them getting involvement of
local banks and foreign strategic partners.
According to State Bank figures, Vietnam’s
current banking system consists of five state-run commercial banks, 37 joint
stock banks, the Vietnam Bank for Social Policies, Vietnam Development Bank, 17
financial and 13 financial leasing firms. The foreign invested sector includes
five joint venture banks, five wholly foreign owned banks, 48 foreign bank
branches and 48 foreign bank representative offices.
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