This topic was lively discussed at Vietnam M&A Forum 2013 held by Dau tu newspaper and AVM Vietnam Joint Stock Company in HCMC on Thursday.

Chances from bank restructuring

Dao Minh Tu, deputy governor of the State Bank of Vietnam (SBV), informed there were currently 13 banks with foreign strategic partners.

A number of banks, both State-owned and private ones, are looking for strategic partners, said Sanjay Kalra, resident representative of the International Monetary Fund (IMF) in Vietnam and Laos.

Investors show a considerable interest in the restructuring of credit institutions, especially nine banks classified as weak.

Eight of these banks have made schemes for restructuring and the job is progressing well, said Tu.

Investors and experts expressed a concern that bank restructuring was moving too slowly. In response, Tu said: “Banks are moving on the right path and at a fast pace, not as slow as people think.”

What matters is not the time, but the efficiency of the restructuring process, he stated.

SBV will let banks make self-adjustment plans first through mergers and search for potential partners. Only in case of necessity will the central bank intervene to prevent property loss and guarantee the efficiency of the restructuring process, he said.

The amended version of Decree 69 stipulates that in some special cases, foreign investors can hold a combined stake of over 30% in a Vietnamese bank. This amendment has caught the attention of many foreign investors.

With the presence of foreign strategic partners, banks are changing in a good way, from governance, business, training to brand building.

Kalra stressed bank merger was not simply a process of combining two banks together, which just resulted in a bigger bank, not a stronger one. The most important part of this process is to change the way of doing business and governance and to create momentum for better operations.

Market remains attractive

M&A deals in Vietnam totaled some US$1.53 billion in the first half of 2013, a relatively low value compared to the same period last year.

Still, John Ditty, CEO of KPMG Vietnam and Cambodia, forecast M&A deals this year would have a value approximate to the figure last year. The total value of M&A deals in 2012 was US$4.9 billion, versus US$6.3 billion in the preceding year.

Large M&A deals used to be those worth tens of millions of U.S. dollars, but now there are transactions worth hundreds of millions or even billions of U.S. dollars.

Masataka “Sam” Yoshida, senior managing director of RECOF Corporation, remarked Vietnamese companies often quoted high prices, making it hard for Japanese partners eyeing M&A deals.

Even so, he believed the M&A market still had much room to grow.

The Vietnam M&A market is attractive because investors can not only do business in the local market but also penetrate a wide market opened up by the free trade agreements (FTA) that Vietnam is involved in.

Vo Tri Thanh, vice president of the Central Institute for Economic Management, said many investors had told him that the more challenges there were in the market, the more chances there would be for M&A.

The outlook of foreign capital inflows via M&A remain positive as negotiations over the Trans-Pacific Partnership (PPP), the FTA with the European Union and ASEAN+6 are nearing completion, with a huge market ahead.

Source: SaigonTimes