One of the most highly expected M&A deals is the merger of PG Bank with HD Bank. A representative of HD Bank said the merger would be completed in August, while HD Bank after the merger will restructure and prepare for the establishment of a finance leasing company, overseas remittance service company and insurance company.

At Saigon Bank, the biggest shareholder of the bank, the HCMC Communist Party Committee, has divested 18 percent of its shares in the bank and is considering divesting all shares.

There is no information about which M&A deal will come next.

Experts earlier this year predicted there would be a high number of M&A deals this year. Shareholders’ meetings of many banks, including Military Bank, LienViet Post Bank and VP Bank, also discussed M&A plans.

But the M&A market has been quiet for two years. One of the reasons, according to experts, is the lack of financially capable Vietnamese investors.

Bank M&A activities have experienced two major stages - the first, occurring before the restructuring period (1990-2000), and the second, during restructuring, from 2011 to now.

In the first stage, many joint stock banks were established by merging with credit co-operatives on the verge of bankruptcy. In the second stage, a lot of deals were made, in which Vietnam’s banks sold shares to foreign institutions or domestic investors.

In 2011, the Vietnamese banking system comprised 52 commercial banks, 51 foreign bank branches, 31 non-bank credit institutions, one central credit fund, a network of local credit funds, and some small-scale financial institutions.

In 2011-2016, Vietnam witnessed seven bank M&A deals with participation of 16 commercial banks, which resulted in a decrease of 10 banks. 

In 2016, there was no successful M&A deal. Only TP Bank succeeded in attracting foreign capital as IFC poured $18.3 million into the bank through buying preferential shares to acquire 4.9 percent of TP Bank shares.

In 2017, Vinaconex-Viettel Finance Company (VVF) officially merged with SHB Bank. The failure of the plan to merge PG Bank with VietinBank was announced by VietinBank on April 21, 2018.

Analysts say there are too many commercial banks in Vietnam and it is necessary to cut the number. M&A is a good way to do this. The biggest advantage of M&A is that it saves money. The State does not have to spend a lot to repair the damage and stabilize the finance market.

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Thanh Lich