Japanese banks take on strategic roles

Given their financially sound cornerstone and professional know-how, Japanese megabanks are actively exploring sensible bolt-on opportunities of banks in Southeast Asia, including Vietnam, as a critical part of their international market expansion.

Japanese banks take on strategic roles
MUFG has been working in collaboration with VietinBank for years. VIR photo: Le Toan

Japan’s Sumitomo Mitsui Banking Corporation (SMBC), the banking arm of Sumitomo Mitsui Financial Group (SMFG) was last week reported to have acquired a 5 per cent stake in Philippines-based lender Rizal Commercial Banking Corp (RCBC), equivalent to around $93.9 million.

After securing fresh capital from SMBC, RCBC would set up a digital banking arm and ramp up tech investments, as the Japanese bank and the Fillipo bank are interested in attracting their tech-savvy customers.

Established in 1960, RCBC is the sixth-largest private bank in the Philippines with net assets of around $15.2 billion, and about half of its revenue comes from corporate lending. The company also focuses on lending to small and medium-sized enterprises, which has seen an increase in demand following COVID-19 outbreaks, according to Nikkei Asia.

SMBC’s exposure to outbound investment in overseas market, particularly in Southeast Asia, has been one of its top priority for the past few years. The bank aims to leverage the digital banking expertise of its Indonesian subsidiary, Bank BTON, to create business synergies in Asia.

In April, SMFG, through its consumer finance company SMBCCF, acquired 49 per cent in FE Credit, Vietnam’s largest consumer finance company under VPBank. The $1.4 billion bet on FE Credit is part of SMFG’s strategy to increase its footprint in Asia.

The mega-deal will offer mutual benefits, where the Japanese lender fund could jump on the lucrative consumer finance bandwagon in Vietnam, and FE Credit could enhance its operations to international standards.

Meanwhile, VPBank last month announced setting its maximum foreign ownership limit at 15 per cent, with plans to make a private placement for a foreign strategic investor. Ngo Chi Dung, chairman of VPBank, said in its latest shareholders meeting that the bank is planning to offer a private placement to a strategic partner by the end of this year.

SMFG is publicly mentioned as one of the most likely bidders, given its close-knit relationship with VPBank which is clearly illustrate by the FE Credit deal and SMFG’s strong financial backbone.

However, not all of SMFG’s deals are magic touch. Besides a rosy outlook with VPBank ecosystem, SMFG has been bogged down with another Vietnamese lender, Eximbank. Eximbank has been tangled up with a range of financial disputes for several years.

 

Last year, SMFG failed in purchasing PT Bank Permata – a local lender in Indonesia – which was acquired by Bangkok Bank Pcl. Sumitomo Mitsui already owns PT Bank TPN in the Southeast Asian nation, according to Bloomberg. “It was very painful to miss out on Permata. However, we are already thinking about the next move,” CEO Jun Ohta said at that time.

Elsewhere, Mizuho is currently the largest strategic shareholder of Vietcombank. In early 2019, it purchased additional new shares to maintain its existing 15 per cent stake in Vietcombank, thus creating a solid capital buffer for Vietcombank as the leading local lender. The bank revealed that roughly 70 per cent of listed Japanese companies are its customers.

MUFG Bank Ltd., a wholly-owned banking unit of Mitsubishi UFJ Financial Group, is also expanding its reach. MUFG now has a 92.47 per cent stake in Indonesia’s PT Bank Danamon Indonesia Tbk, a 76.88 per cent interest in Thailand’s Bank of Ayudhya PCL, 20 per cent in the Philippines’ Security Bank Corporation, and 19.73 per cent ownership in VietinBank.

Cooperation between VietinBank and MUFG continues to support businesses and Japanese enterprises in particular with regard to banking and financial services in Vietnam. In June last year, VietinBank’s Board of Directors approved the plan to transfer 49 per cent stake in its 100 per cent wholly-owned subsidiary VietinBank Lease to Mitsubishi UFJ Lease & Finance and transfer 1 per cent stake of the company to a domestic investor. VietinBank Lease has been constantly expanding its market share in Vietnam, supported by VietinBank’s strong brand and customer base.

Through investment in VietinBank Lease, MUFG will launch its business in Vietnam and provide financial services to local customers while sharing its extensive expertise and knowledge with VietinBank Lease. MUFG and SMFG, along with Brit-based Standard Chartered, were mentioned as other potential bidders to acquire Citibank’s retail business arm after Citibank’s announcement in April.

While Japanese banks have seen an increase in lending since last year as companies rushed to borrow due to the pandemic, a prolonged low-rate environment and a shrinking population have weighed on profits. MUFG, Mizuho, and SMBC have sought growth outside Japan, Reuters reported.

In 2020, Aozora Bank – another Japanese lender - acquired a 15 per cent stake in Vietnamese bank OCB in a deal worth $139 million. This was the first merger and acquisition carried out by Aozora in an overseas market since 2001 and made Aozora OCB’s largest shareholder.

Source: VIR

Japanese investors secure foothold in leading Vietnamese brands through M&A

Japanese investors secure foothold in leading Vietnamese brands through M&A

Japanese investors have poured billions of dollars to purchase stakes at Vietnamese businesses over the past decade.

Japan supports firms engaging in smart city building in Vietnam

Japan supports firms engaging in smart city building in Vietnam

The Japanese government will set up a fund worth JPY250 billion ($2.4 billion) to support Japanese companies' "smart-city" projects and to help further decarbonisation measures in Vietnam and other Southeast Asian nations, reported the Nikkei Asia.

 
 

Other News

.
Hanoi targets GRDP growth up to 7.5% in 2021
Hanoi targets GRDP growth up to 7.5% in 2021
BUSINESSicon  18/07/2021 

Hanoi will take advantage of a shift in investment capital worldwide to attract foreign direct investment into the city.

ASEAN, Czech Republic look to standardise customs procedures
ASEAN, Czech Republic look to standardise customs procedures
BUSINESSicon  18/07/2021 

The Association of Southeast Asia Nations (ASEAN) Committee in coordination with the Customs Administration of the Czech Republic has held a webinar to introduce the electronic customs of the European country.

SBV allows banks to expand credit room
SBV allows banks to expand credit room
BUSINESSicon  18/07/2021 

The State Bank of Viet Nam (SBV) has just officially approved credit room extension for some banks.

Live streamers compelled to register with MIC if new draft decree adopted
Live streamers compelled to register with MIC if new draft decree adopted
BUSINESSicon  18/07/2021 

The Ministry of Information and Communications has proposed that only licensed social networking sites and accounts should be allowed to livestream to generate revenue.

Vietnamese top list of most online shoppers in SEA
Vietnamese top list of most online shoppers in SEA
BUSINESSicon  17/07/2021 

Vietnam has the highest number of people shopping on e-commerce platforms in the Southeast Asia region with some 49.3 million people, according to the E-commerce White Book 2021 released by the Vietnam E-Commerce and Digital Economy Agency.

Vietnam ‘promised land’ for digital banking
Vietnam ‘promised land’ for digital banking
BUSINESSicon  17/07/2021 

Vietnam is among the regional countries that are seeing new digital bank models, experts have said.

Textile and garment makers seek multitude of options
Textile and garment makers seek multitude of options
BUSINESSicon  17/07/2021 

As the current outbreak of the pandemic remains complicated, textile and garment makers fear lasting impacts on their operations, 

Bumps ahead for the giants of transport
Bumps ahead for the giants of transport
BUSINESSicon  17/07/2021 

After enduring months of losses, state-owned transport giants Vietnam Railways and Vietnam Airlines are pinning hopes on a financial lifebuoy to recover from the incurred losses – but even significant support may not be enough for them.

Tardy public spending will hinder post-pandemic economic recovery
Tardy public spending will hinder post-pandemic economic recovery
BUSINESSicon  17/07/2021 

The COVID-19 health crisis and the resulting economic downturn has thrown a spanner in the works of already tardy public spending, hindering Vietnam’s efforts to revive its post-pandemic economy and speed up slowing GDP growth.

Vietnam moving out of the epidemic more slowly than others, needs new policies
Vietnam moving out of the epidemic more slowly than others, needs new policies
FEATUREicon  18/07/2021 

Prime Minister Pham Minh Chinh affirmed that Vietnam’s development goals have not changed and agreed with the two GDP growth scenarios for 2021 developed by the Ministry of Planning and Investment.

Vietnam among top 20 FDI destinations in the world
Vietnam among top 20 FDI destinations in the world
BUSINESSicon  16/07/2021 

For the first time, Vietnam is among the top 20 countries attracting the most foreign direct investment (FDI) capital in the world, according to World Investment Report 2021 by the United Nations Conference on Trade and Development (UNCTAD).

Six cities and provinces to pioneer in use of e-invoices
Six cities and provinces to pioneer in use of e-invoices
BUSINESSicon  16/07/2021 

The General Department of Taxation plans to launch the electronic invoice system at tax departments in Ha Noi, HCM City, Quang Ninh, Hai Phong, Phu Tho and Binh Dinh by the end of this year before rolling it out nationwide in 2022.

VIETNAM BUSINESS NEWS JULY 17
VIETNAM BUSINESS NEWS JULY 17
BUSINESSicon  17/07/2021 

Businesses have expressed their hope that customs agencies and relevant ministries and sectors will further simplify administrative procedures, which, they suggested, should be completely handled online, according to a survey.

New money into stock market slows down, economy growth may miss expectations
New money into stock market slows down, economy growth may miss expectations
BUSINESSicon  16/07/2021 

In its recent report, Dragon Capital said that the market uptrend is still led by new individual investors.

Three mobile network providers seek permission to launch mobile money services
Three mobile network providers seek permission to launch mobile money services
BUSINESSicon  16/07/2021 

Three mobile network operators - Viettel, VNPT and MobiFone - have applied for the implementation of their own Mobile Money pilot projects.

Vietnam set to reach mobile wallet penetration of nearly 55 per cent by 2025
Vietnam set to reach mobile wallet penetration of nearly 55 per cent by 2025
BUSINESSicon  16/07/2021 

Vietnam is set to see rapid expansion in terms of mobile wallet usage with mobile wallet penetration to reach nearly 55 per cent by 2025.

Foreign retailers come, Vietnamese billionaires struggle to survive
Foreign retailers come, Vietnamese billionaires struggle to survive
FEATUREicon  16/07/2021 

The increasing presence of foreign giants has put great pressure on domestic retailers.

Opening the economy again step by step
Opening the economy again step by step
FEATUREicon  16/07/2021 

Economists have urged the gradual reopening of the economy. VietNamNet talked to Dr Nguyen Duc Kien about the issue.

HCM City applies ‘production-and-quarantine’ model
HCM City applies ‘production-and-quarantine’ model
FEATUREicon  16/07/2021 

Many enterprises in HCM City are operating under a so-called production-and-quarantine model, i.e. maintaining production while strictly following quarantine rules amid the Covid-19 outbreak.

Agriculture Minister warns of unsustainable development
Agriculture Minister warns of unsustainable development
BUSINESSicon  16/07/2021 

The Minister of Agriculture has expressed concern over the abuse of fertilizer and plant protection chemicals, saying this does not represent sustainable agriculture.

 
 
 
Leave your comment on an article

OR QUICK LOGIN