According to the latest report of PwC on Global M&A Trends in the financial services industry: 2022 outlook, the financial services industry in The Asia-Pacific region has witnessed vibrant M&A activity, driven by increased investor confidence and demand.
In Vietnam, deals in the banking and finance sector are forecasted to flourish with the participation of foreign financial institutions.
Sumitomo Mitsui Banking Corporation (SMBC), who held 15% of the ownership rate at Eximbank, plans to divest from Eximbank in the coming time, ending 14 years of cooperation. SMBC aims to pave the way to become a strategic shareholder in VPBank.
Previously, in 2021, VPBank sold 49% of its charter capital at FE Credit to SMBC. VPBank also received two consecutive syndicated loans with SMBC's participation with a total value of 300 million USD. That is one of the largest deals in the M&A market of the financial services industry in Vietnam.
Besides VPBank, the expected deals in 2022 include the acquisition of two finance companies: FCCOM (of MSB) and Handico Finance Joint Stock Company (HAFIC).
If these deals are successful, M&A of Vietnamese banks is expected to continue to rise, especially when many other banks are also looking for foreign investors such as Vietcombank, OCB, LienVietPostBank, Nam A Bank, etc.
Some other notable deals include the Bank of Thailand's acquisition of SHB's consumer finance branch with a value of 156 million USD and Mizuho Bank's acquisition of a 7.5% stake at Momo with a value of 150 million USD.
Technology and innovation-related deals are expected to lead the M&A market in the financial services industry. Mergers and divestitures will be favored as banks, insurers, and asset managers seek to optimize costs, grow revenue, and improve efficiency and profitability.
According to a PwC report, some of the key trends that will have a direct impact on the M&A activity of the financial services industry in 2022 include:
As many fintech and non-financial companies are changing the game, the ability to advance technology remains the key to helping financial businesses gain a competitive edge in the marketplace.
Vietnamese banks and financial institutions, especially fintech companies, have been expanding and diversifying their product portfolios and digital capabilities. A prominent example is the partnership between Techcombank and Amazon Web Services and Backbase to deploy services using cloud computing. Therefore, in 2022, M&A activities and strategic cooperation are expected to focus on deals and transactions to improve business capacity, respond to cybersecurity risks, and speed up the payment process.
Embedded finance is a prominent trend today as many businesses can integrate financial services into their operations and service portfolios. The growth of the digital economy has fostered cooperation between the financial services industry and distribution channels to create financial transactions and opportunities, such as consumer lending through B2C digital channels.
In addition, large financial enterprises, including card issuers, will likely leverage M&A to strengthen their capabilities to compete with fintech firms in many emerging services, such as Buy Now, Pay Later.
The State Bank of Vietnam (SBV) has issued the Environmental and Social Risk Assessment Manual for 10 economic sectors in credit operations as the first step in integrating ESG criteria into banking industry operations in 2018.
Recently, the State Bank of Vietnam promoted the development of a draft circular guiding the implementation of environmental risk management in credit granting activities of credit institutions and branches of foreign banks.
As concerns about complying with ESG grow, those actions will affect the financial services industry's risk management and value creation.
Compiled by VietnamCredit
