Thai firm to acquire Agribank subsidiary hinh anh 1The Agribank headquarters in Hanoi. Agribank expects to sell its finance arm ALC I for 22.45 million USD. (Photo courtesy of Agribank)
Hanoi (VNS/VNA) - Thai financial firm Srisawad Corporation is looking to acquire the Finance Leasing Company I (ALC I) of the Vietnam Bank for Agriculture and Rural Development (Agribank) at an estimated cost of 523 billion VND (22.45 million USD).

According to Srisawad, the company is waiting for approval from the State Bank of Vietnam (SBV) for the deal.

In response to the Thai firm’s acquisition proposal, recently sent to the Vietnamese Government Office, SBV said it would be processed after the ALC I restructuring plan is approved according to the country’s regulations.

In 2017, Agribank announced the sale of ALC I and invited investors to acquire the company. As of the end of the year, ALC I recorded accumulated losses of more than 714 billion VND and liabilities of 394 billion VND, according to Agribank’s financial statements.

After negotiations, Srisawad Corporation and Agribank signed a memorandum of understanding (MoU) on the deal in July 2017.  The Thai company agreed to pay a total of 523 billion VND to acquire the Agribank subsidiary, including all of ALC I’s 200 billion VND charter capital and the 323 billion VND original debt that ALC I borrowed from Agribank.

According to experts, investors are interested in Vietnamese finance companies thanks to the high growth potential of the local consumer finance market. The market is projected to reach 44 billion USD this year, largely driven by an increase in consumer spending, a rise in urbanisation and the strict lending rules of domestic banks, according to Viet Dragon Securities Corporation.

Economist Le Xuan Nghia said consumer finance was a global trend, citing Europe as an example where consumer credit accounted for some 71 percent of bank loans. The proportion of consumer lending in Vietnam’s economy was lower than that of other medium-income countries, where the ratio stands around 30 percent.

To lure foreign investment in the market – which will benefit not only local firms but also customers and the entire Vietnamese economy – chief economist of the Bank for Investment and Development of Vietnam Can Van Luc suggested improving the legal framework for the management of financial companies and creating favourable conditions for new companies to develop in order to increase competition.

These moves would help reduce lending interest rates of consumer loans, increase the variety of products and services and bring more benefits to consumers and the economy, Luc explained.

At the same time, Lực said, the Government should quickly complete and implement the National Financial Inclusion Strategies (NFIS) to increase access to financial services.-VNS/VNA