Expect a busy year for bank mergers and acquisitions in 2025.
Transactions are taking place at GPBank as the central bank, led by Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu, has made proposals to the government for the transfer of two struggling banks, GPBank and DongA Bank. VPBank and HDBank have previously expressed interest in acquiring these struggling banks, with VPBank expected to take over GPBank and HDBank planning to acquire DongA Bank. The successful transfer of CBBank and OceanBank to Vietcombank and MB, respectively, in October 2024 set a precedent for these acquisitions.
Associate Professor Dinh Trong Thinh from the Academy of Finance emphasized the importance of transferring struggling banks to protect depositors and allow stronger banks to take over and restructure these institutions. This process is crucial for enhancing the stability and sustainability of Vietnam’s banking system. The 2024 Law on Credit Institutions, effective since July 2024, clarifies regulations regarding mandatory transfers of struggling banks, providing a solid legal framework for these transactions. These regulations safeguard depositors’ and stakeholders’ interests while enabling receiving banks to implement restructuring processes safely and effectively.
Techcombank is considering selling a 15% stake to a foreign strategic investor to diversify its ownership structure. With foreign ownership at 22.5%, Techcombank seeks to comply with the 30% foreign ownership cap by divesting some existing foreign shareholders before welcoming new investors. Vietcombank and BIDV, anticipating billion-dollar capital sales, have postponed their share issuance plans due to market conditions. MBS reports that both banks plan to proceed with these transactions in 2025, with Vietcombank aiming for completion in the first half of the year.
VietinBank, BIDV, Vietcombank, VPBank, and OCB are domestic banks with foreign strategic shareholders, while Nam A Bank and LPBank are negotiating with potential partners to attract suitable investors. The banking sector continuously faces pressure to increase charter capital to meet credit growth requirements. LPBank recently distributed stock dividends to boost its charter capital, following the approval of the increase plan during an extraordinary general meeting in November 2024.
The SBV has permitted banks like SHB, BAC A BANK, and NCB to raise their charter capital through various methods, such as issuing stock dividends or conducting share placements. Maintaining the capital adequacy ratio (CAR) at the mandated level is crucial for banks, requiring charter capital adjustments to align with total risk-weighted assets. Despite improvements in Vietnam’s financial system, banks struggle to meet the regional average CAR due to declining interest rates and weakened corporate financial health.
Experts highlight the need for foreign capital to enhance long-term capital increase strategies, enabling banks to improve sustainability and competitiveness. Foreign partners can provide financial resources, management expertise, and risk management capabilities according to international standards. Raising foreign capital is seen as a vital step in meeting the challenges faced by the banking sector and promoting its long-term growth and stability.