VietNamNet Bridge - Many M&A deals between banks and finance companies have been reported recently. 

SHB has wrapped up the deal to acquire Vinaconex-Viettel Finance Company (VVF) after two years of pursuing the purchase.

After getting the State Bank’s nod on the merger, the bank announced the establishment of SHB Consumer Finance with charter capital of VND1 trillion. It has revealed a plan to cooperate with foreign partners in the future.

Besides HDBank, VPBank and Techcombank, other banks such as SHB and Maritime Bank all have completed plans to buy finance companies. Many banks have revealed plans to expand their business into the consumer finance sector.

Most recently, in mid-April 2017, OCB said it would set up a finance company this year, capitalized at VND500 billion, and an asset management company capitalized at VND100 billion. 

Vietnam’s consumer credit market has also attracted foreign investors, including the ones from Japan.

If it doesn’t set up new companies, it would buy a finance company in which it would hold at least 70 percent of the charter capital.

ACB also said it is considering setting up a new finance company or buying one, shifting its leasing company – ACB Leasing – into a consumer finance company.

SeABank has also stated it would contribute VND500 billion at most to a consumer finance company.

Analysts commented that consumer credit is increasingly attractive in banks’ eyes. 

By acquiring existing finance companies, banks can provide loans without mortgage assets, which can bring higher profits than normal loans, despite the high risks.

The finance reports of many commercial banks showed that in 2016 and the first quarter of 2017, their profits increased sharply thanks to consumer credit.

VP Bank’s finance report, for example, showed that the profit of the holding company in the first quarter of 2017 was VND814 billion only, while the other VND1.1 trillion was from subsidiaries, mostly FE Credit.

As for ACB, the credit provided to individual customers increased by 30 percent in 2016, accounting for 53.81 percent of total outstanding loans, which helped the bank’s net profit increase by 17.1 percent.

Vietnam’s consumer credit market has also attracted foreign investors, including the ones from Japan.

The State Bank has accepted the legal shifting of BLC (BIDV Finance Leasing Company), 100 percent owned by BIDV, into BIDV-SuMi TRUST (BSL) with the 49 percent capital contribution from Sumitomo Mitsui Trust Bank – SMTB.

Meanwhile, Shinsei Bank, has taken over 49 percent of capital contribution at MC Credit, a finance company belonging to MB.

Prior to that, HD Bank transferred a 49 percent stake of HD Finance to Credit Saison.

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