M&A activities are expected to continue to grow strongly in 2022, especially in the banking and finance sector.
2022 promises "huge" M&A deals
According to a recent report on "Global M&A Trends 2022", PwC believes that M&A activities are expected to continue to grow strongly in 2022, despite market fluctuations thanks to abundant capital availability and growing demand for digital assets and data.
In which, deals in the banking and finance sector are forecasted to flourish with the participation of foreign financial institutions.
One of the deals expected by the market is VPBank's plan to sell capital to foreign partners.
In mid-2021, the market speculated about SMBC's divestment from Eximbank to clear the way to become a strategic shareholder in VPBank, especially after the Japanese partner bought back 49% of FECredit's capital.
Currently, VPBank is also taking initial steps to private placement for foreign strategic shareholders. Accordingly, the bank has submitted a request for shareholders' opinions on adjusting the maximum foreign ownership ratio from 15% to 17.5% of charter capital.
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At the online discussion with investors in the third quarter, VPBank leaders expected to be able to complete this plan in the first quarter of 2022.
Notably, most recently, Eximbank's Board of Directors has issued a decision to terminate the Strategic Alliance Agreement with SMBC at the request of its Japanese partner.
SMBC is known as the largest shareholder in Eximbank with more than 185 million shares held, equivalent to 15% of the bank's share capital. However, despite owning a large number of shares, SMBC's voice has almost no influence at the bank. At the 2021 annual general meeting of shareholders on April 27, 2021, SMBC did not send people to attend.
Besides VPBank, the expected deals this year include the acquisition of two finance companies FCCOM (of MSB) and Handico Finance Joint Stock Company (HAFIC).
Updating the progress of selling 100% of shares in FCCOM financial company, MSB leaders said that they had signed a confidentiality agreement with partners. The estimated profit from this deal is about VND 2,000 billion. The bank will be completed in 2022.
Meanwhile, Handico Finance Joint Stock Company (HAFIC) is the focus of attention of many domestic and foreign organizations. TPBank, AFS (Japan), KB Kookmin Card (Korea) are all showing interest in HAFIC even though the company has been under special control by the State Bank (SBV) since 2015.
If these deals are successful, M&A of Vietnamese banks is expected to continue to rise, especially when many other banks are also looking for foreign investors such as Vietcombank, OCB, LienVietPostBank, Nam A Bank,... .
In addition, the fact that a few private joint stock commercial banks can increase the maximum foreign ownership ceiling to 49% under the EVFTA agreement is also one of the factors that will promote M&A deals this year.
Accordingly, the two names mentioned are HDBank and Sacombank. A report by Mirae Asset Vietnam Securities said that HDBank is one of the few banks being considered to increase the foreign ownership limit to 49% according to the roadmap specified in the EVFTA trade agreement.
Analysts believe that if selected to be a pilot bank, it will be a factor supporting the price of the stock, as the limit relaxation will attract more long-term investors.
While Viet Capital Securities (VCSC) considers the most obvious candidate for this EVFTA commitment is Sacombank. The securities company explained that currently, 32.5% of the outstanding shares of the bank held as collateral for an unpaid debt have been transferred to the Asset Management Company of the Bank. Vietnam Credit Institutions (VAMC).
Therefore, this 32.5% sale in one lump sum will give VAMC the highest value for the highest price, and because this share exceeds the 30% FOL threshold currently applied to banks, the sale would have to be made under a special exemption such as the EVFTA.
Despite the favorable market environment again, the recent report of PWC notes that rising interest rates, higher inflation, together with increased taxes and applied regulatory barriers could be factors that make the market more difficult. slow down many deals in 2022.
Difficult domestic M&A deals
Contrary to the positives of foreign investors, mergers and acquisitions among domestic banks have not been active in recent years. The most recent is the failed relationship between HDBank and PG Bank. Previously, PGBank also "missed" VietinBank after many years of negotiations.
Regarding this issue, VCSC believes that the fact that there have been no large-scale banking M&A deals since Sacombank merged with Phuong Nam Commercial Joint Stock Bank in 2015 shows that banks are cautious in participating in the banking industry. in these deals, with the difficulty of information technology integration being a major obstacle.
"Any major M&A deal between state-owned commercial banks and large private-owned commercial banks will face information technology obstacles," the report said.
The fact that 3 banks with 0 dong (currently 3 banks have 0 dong: CB Bank, GP Bank and Ocean Bank) under the supervision of the State Bank in 2015 has not yet taken place any M&A deals, which partly reinforces the above view. .
In addition, zero-dong banks are not clear candidates for EVFTA commitments because Circular 38 of the SBV has shown an opportunity for foreign investors to buy more than 30% of shares in a bank. contract with the Government's approval since 2014. However, there have been no buyers so far, VCSC said.
By Vienambiz.com