The Asia Commercial Bank (ACB) will be the latest bank to join the waveof mergers among commercial banks and finance companies that is expectedto become a major trend this year.
ACB announced on April 8 thatit will submit for approval, a project to set up a finance company witha charter capital of 500 billion VND (23.25 million USD), during itsshareholders meeting on April 22.
Industry experts said that thewave of mergers of commercial banks and finance companies is expected tocontinuously surge this year to meet legal regulations and boostconsumer lending.
The experts said the move wouldbecome a major trend this year, explaining that according to a StateBank of Vietnam (SBV)'s draft circular regulating the consumer creditactivities of financial companies, which is expected to be approvedsoon, commercial banks would need to establish financial companies ifthey want to venture into consumer lending.
Besides, State-ownedgroups and firms would also become obliged to finalise capitaldivestment from non-core businesses, including financial companies, fromthis year.
Senior finance expert Can Van Luc told the Dau tu(Investment) newspaper that State-owned groups and firms were facinghuge pressure to exit from financial companies and this was an opportunetime for banks to fully merge with these companies and boost consumerlending.
Luc pointed out that consumer lendingaccounted for just 6 percent of the total outstanding loans in Vietnam.Meanwhile, this rate was 15 to 20 percent in many other countries, andas high as 35 to 40 percent in the US market.
Besides, the merger activities of banks and financial firms wereforecast to be vibrant this year, as per a SBV circular, which saidbanks would only be allowed to possess a stake in a maximum of twocredit institutions, and the ownership must not be greater than 5percent.
At present, many banks own several stakesin financial companies, and in many cases their stakes surpass the 5percent benchmark.
Techcombank, for example, alreadypossesses a 10 percent stake in the Vietnam Chemical Finance JSC(VCFC). The bank, therefore, announced earlier this year that VCFC wouldtransfer roughly 90 percent of their stake to Techcombank in the firstquarter this year, bumping up Techcombank's total stake in the VCFC to99.87 percent.
Other mergers between financialcompanies and banks are also expected to become a reality this year,including between the Sai Gon-Hanoi Bank (SHB) and the Vinaconex-ViettelFinance JSC (VVF), and between the Maritime Bank and Textile FinanceJSC (TFC), both of which have received in-principle approval from thecentral bank.
Earlier this month, the HCM CityHousing Development Joint Stock Bank (HDBank) and the Japanese CreditSaison Company Ltd also formed the HD Saison Finance, in which the twowill contribute to develop the retail finance industry in the country.
Banking expert Huynh Trung Minh said the growing number offinance companies would help reduce interest rates on consumer loansand improve the service quality of lending.-VNA
ACB announced on April 8 thatit will submit for approval, a project to set up a finance company witha charter capital of 500 billion VND (23.25 million USD), during itsshareholders meeting on April 22.
Industry experts said that thewave of mergers of commercial banks and finance companies is expected tocontinuously surge this year to meet legal regulations and boostconsumer lending.
The experts said the move wouldbecome a major trend this year, explaining that according to a StateBank of Vietnam (SBV)'s draft circular regulating the consumer creditactivities of financial companies, which is expected to be approvedsoon, commercial banks would need to establish financial companies ifthey want to venture into consumer lending.
Besides, State-ownedgroups and firms would also become obliged to finalise capitaldivestment from non-core businesses, including financial companies, fromthis year.
Senior finance expert Can Van Luc told the Dau tu(Investment) newspaper that State-owned groups and firms were facinghuge pressure to exit from financial companies and this was an opportunetime for banks to fully merge with these companies and boost consumerlending.
Luc pointed out that consumer lendingaccounted for just 6 percent of the total outstanding loans in Vietnam.Meanwhile, this rate was 15 to 20 percent in many other countries, andas high as 35 to 40 percent in the US market.
Besides, the merger activities of banks and financial firms wereforecast to be vibrant this year, as per a SBV circular, which saidbanks would only be allowed to possess a stake in a maximum of twocredit institutions, and the ownership must not be greater than 5percent.
At present, many banks own several stakesin financial companies, and in many cases their stakes surpass the 5percent benchmark.
Techcombank, for example, alreadypossesses a 10 percent stake in the Vietnam Chemical Finance JSC(VCFC). The bank, therefore, announced earlier this year that VCFC wouldtransfer roughly 90 percent of their stake to Techcombank in the firstquarter this year, bumping up Techcombank's total stake in the VCFC to99.87 percent.
Other mergers between financialcompanies and banks are also expected to become a reality this year,including between the Sai Gon-Hanoi Bank (SHB) and the Vinaconex-ViettelFinance JSC (VVF), and between the Maritime Bank and Textile FinanceJSC (TFC), both of which have received in-principle approval from thecentral bank.
Earlier this month, the HCM CityHousing Development Joint Stock Bank (HDBank) and the Japanese CreditSaison Company Ltd also formed the HD Saison Finance, in which the twowill contribute to develop the retail finance industry in the country.
Banking expert Huynh Trung Minh said the growing number offinance companies would help reduce interest rates on consumer loansand improve the service quality of lending.-VNA
