Mergers and acquisitions between financial companies and banks

As financial news on July 03, 2014, while banks are required to apply cap interest rate, financial companies might not face weaknesses like cap interest rate, complicated lending procedures, illiquidity, etc. These are advantages of financial companies that banks should keep in mind in order to boost the retail market, especially after the promulgation of Decree No. 39/2014/ND-CP.

It could be named some recently cases reflecting the M&A such as VP bank and Vinacomin Finance Company, the Housing Development Joint Stock Commercial Bank (HDBank) and Société Générale Viet Finance (SGVF), one of the largest foreign-owned consumer finance companies in the country. To be hunger for benefit, banks unveiled plans to acquire finance companies to take advantage of their retail business and boost lending and avoid disadvantages as mentioned above. Especially, newly promulgated Decree No. 39/2014/ND-CP on operation of financial companies also attract bank to buy to expands the business fields of financial companies. Particularly, financial companies could borrow loans from domestic and overseas credit institutions and financial institution provide bank guarantee and issue credit cards. In term of financial companies, the experience of loss seen in Post Financial Company, Rubber Financial Company, pressures of divestment and restructuring from the State, emerging to bank could be a brighter future for them.

As statistics, Vietnam currently has 5 foreign financial companies such as Prudential (Anh), PPF (Hollands), Toyota Vietnam (Japan), Vietnam JACCS (Japan), Miare Asset and 12 financial companies under the State owned Corporation and Group. While the 5 companies have no intention to be sold, bank could have only one choice to buy the State-owned companies to boost their retail sales.

 

Source: Financial news (VTV1)