More M&A deals in the banking sector next year: experts

 

Hanoi (VNS/VNA) — Vietnam’s equity market may witness big merger and acquisition (M&A) deals in 2021 as local banks are trying to lure foreign capital on the country’s participation in international trade deals.

Vietnamese banks, especially small-cap ones, are targeting more foreign capital to improve their performances, financial expert Huynh Trung Minh said.

However, the global markets have been hit by the COVID-19 pandemic, so it is difficult for foreign investors to hunt Vietnamese banking shares at the moment, he said, cited by tinnhanhchungkhoan.vn.

So the banks lock their foreign ownership ratios to wait for the opportunities to come and keep their shares from the market volatility.

Among those banks making the move was the Vietnam Technological and Commercial Joint Stock Bank (Techcombank), which capped its foreign capital ratio at 22.5 percent.

HCM City Development Joint Stock Commercial Bank (HDBank) also decided to curb foreign investors’ ownership limit to 21.5 percent from 30 percent in order to attract potential buyers.

Vietnam Prosperity Joint Stock Commercial Bank also cut the foreign ownership limit by 7.77 percent to 15 percent.

Among others, VietCapital Bank and NamA Bank are discussing similar ideas with shareholders.

Techcombank shares (HoSE: TCB) have gained as much as 32.6 percent since July 30 to touch the six-month high of around 24,000 VND apiece.

HDBank shares (HoSE: HDB) and VPBank shares (HoSE: VPB) have respectively increased by as much as 7.7 percent and 29 percent in the same time.

According to bank officials, the banks will not sell their shares on the market at any cost and they will select the buyers carefully.

Under Decree 01/2014/ND-CP, a foreign investor cannot own more than 20 percent of a Vietnamese financial institution and the total ownership among all foreign investors cannot exceed 30 percent.

Some Vietnamese banks have completed selling stakes to foreign buyers but many of them still have room to welcome overseas investors.

On the other hand, the European Union-Vietnam Free Trade Agreement (EVFTA) may facilitate European financial firms to penetrate Vietnamese market. One of the key things under the trade pact is European investors may increase their ownership ratios to maximum 49 percent in two Vietnamese banks.

Those beneficial banks will not include the top four State-controlled banks – Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), and Agribank.

That rule now puts private-equity banks, including VPBank, Techcombank, Asia Commercial Joint Stock Bank (ACB) and Vietnam International Joint Stock Commercial Bank (VIB), at the centre of attention, according to Vietnam International Securities Co./.