An FE CREDIT consulting booth. As much as 49 per cent of capital of FE Credit, a subsidiary of VPBank, was also sold to SMBC Consumer Finance Company - a member of SMBC Group. Up to now, this is the largest M&A deal in Việt Nam's financial industry with a transaction value of up to $1.4 billion. — Photo FE Credit

HÀ NỘI Many banks have planned strategic mergers and acquisitions (M&A) to expand the ecosystem, as announced in this year's shareholder meetings.

A number of banks have announced the sale of capital, selling subsidiaries to foreign partners with a value of up to billions of dollars.

Vietnam Prosperity Commercial Joint Stock Bank (VPBank) has just announced the successful sale of 15 per cent of charter capital to Japan's SMBC Financial Group for nearly VNĐ36 trillion (US$1.5 million). This investment will help raise VPBank's total equity from VNĐ103.5 trillion to approximately VNĐ140 trillion, becoming the bank with the second largest equity in the system.

Previously, 49 per cent of capital of FE Credit, a subsidiary of VPBank, was also sold to SMBC Consumer Finance Company - a member of SMBC Group. Up to now, this is the largest M&A deal in Việt Nam's financial industry with a transaction value of up to $1.4 billion.

At the Annual General Meeting of Shareholders (AGM) of Saigon - Hanoi Commercial Joint Stock Bank (SHB) held on April 11, Đỗ Quang Hiển, Chairman of the Board of Directors informed the value of the sale of SHB Finance to a foreign partner.

Hiển said that SHB and its partner Krungsri were completing the final administrative procedures in the sale of SHB Finance. It is expected the two sides will complete the procedures and in May, SHBs partner will pay 50 per cent of the deal value, the rest will be paid in the next 3 years.

Krungsri once revealed that the bank would spend 5.1 billion Thai baht, equivalent to $156 million, to acquire SHB Finance. Thus, this will be the second largest deal in Việt Nam's financial industry.

In its 2023 Annual General Meeting of Shareholders, HCM City Development Commercial Joint Stock Bank (HDBank) revealed a plan to contribute capital and buy shares of a company in the securities sector to make that company an HDBank subsidiary.

HDBank leaders said that the securities and investment banking sectors are among the focus of future development. Investing in a securities company can help the bank expand and exploit its existing customer base by providing services such as issuance consulting, financial consulting, and restructuring.

The securities company that HDBank intends to invest in will need to meet a number of conditions such as being licensed to carry out operations such as securities brokerage, securities trading and securities investment consulting; has a charter capital of over VNĐ1 trillion according to the most recent year's audited financial statements; and has been profitable for the last 3 consecutive years.

On April 8, Petrolimex completed the divestment of 40 per cent of capital at PGBank. At the same time, this bank also welcomed four new investors, including three institutional shareholders and one individual shareholder.

Petrolimex's divestment gives PGBank the opportunity to find a new group of strategic shareholders with the potential to increase capital after 12 years of standing still. Currently, PGBank is the bank with the lowest charter capital and total assets in the banking system.

The restructuring of credit institutions and handling of weak commercial banks are being urged by the Government. Many banks with strong potential are ready to shoulder the responsibility to recover weak banks.

At the end of March, Vietnam Maritime Commercial Joint Stock Bank (MSB) announced that it had proposed to shareholders to allow the merger with a credit institution.

MSB said that the purpose of the merger is to take advantage of the network, personnel as well as professional activities of the merged bank in order to increase the scale of MSB's operations.

Currently, there are four weak commercial banks subject to restructuring. These are Đông Á Bank (DongABank), Construction Bank (CBBank), Ocean Bank (OceanBank), and Global Petroleum Bank (GPBank).

According to financial experts, weak banks are acquired by big banks under the subsidiary model. The weak bank then will operate in the form of a one-member limit ed liability bank where the larger bank is the owner of 100 per cent of the charter capital.

The State Bank encourages and allows large banks to acquire or merge small and weak banks to support these banks as well as to avoid bad signals in the banking system.