what do you think about vietnam banking industry right now ? and what is the industry's trending in the next periods ?
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- Hoa Dang Ngoc PMP®1314202840
This is such a broad question John. I am going to answer your question in my point of view, the view from a Securities investor :)
Since 2006, a lot of bank has been upgraded or newly open in Vietnam, the number of bank is growing very fast and the banking business environment now more and more competitively. Especially the State Bank has raise the Capital Requirement from 500 Bil to 3000 Bil (VND) this is a high jumping (6 times) for a small bank that cause the problem of scale management in finance and operation that affect to efficient scale of the bank.
Not only that, From this year there going to have 100% foreign bank owner operate in Vietnam. In 2006 Bank shares was name by " King of Shares", thing has change now, the Securities market not good, the shares price keep going down so it's very hard to attract individual investors to invest more money to the bank's even with the listed bank in the stock market, so this will harder for the bank that just have trading on the OTC market. How can a bank issue a new share at price equal to the par value when the real trading price on the market is just haft of that :)
M&A is the only way for them to survive. Finding a Strategic partner or Foreigner Bank to sell or to ask them to be their share holder.
As you can see from the beginning of 2011:
Vietinbank sell 10% to IFC, and going to sell 15% The Bank of Novascotia (BNS) from Canada.
Lienvietbank M&A VNpost
ABBank issue convertible bonds to IFC and Maybank
Mekong Bank sell 15% to Temasek
VIB sell 5% to Commonwealth Bank của Australia
I think this trend going to keep on in the banking industry.-
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thank for your feedback Mr. Ngoc. in practice, i think Vietnam banking industry must do M & A to have stronger banks in the future. Besides, State bank of Vietnam must manage the industry flexible more than in the past. For example, as we know the deposit rate and lending rate in vietnam is very high versus other countries, why Stated bank of Vietnam inserts capital to banking system (for example to give a lending rate of around 2% - 4%pa to commercial banks this lead to reduce immediately the rate as stated bank is able to print money. This also helps vietnam companies overcoming the global recession.
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As new governor of State Bank, I hope Mr. Nguyen Van Binh will bring a bright future to the Banks, Securities and all the finance market :)
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hello John,
I am not a banking person, but what I learn from my own knowledges is the banking industry in VN is a game for big faces only. Commercial, stock or state banks all are working under government rules/regulations, no question on regular supply - demand basic.
Banking, in another word, is a tool of government to manage cash flow, inflation, real-estate, stock, ...only gold price is out of the picture.
Let see what gov going to do for the finance market, then you can seel the industry trending. Otherwise, it is not a subject for "small fish" for us to discuss.-
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Small fishes sometimes decide about the future of the big fishes, this is the new age. look at all those small fishes in the arab countries.
Now to answer John's question and Ngoc's comment:
The banking industry definitely need to consolidate, say the gia dinh bank of Can Tho with the new rule of no more ATM cannot grow, if VISA card is not interested in signing business with them, they cant grow. they can grow, they cant meet the capital adequacy requirements by state bank.
Now assuming that M&A with foreign partners is the way to go, you forget 2 conditions: TRUST and MONEY.
TRUST: None with the current position the rubbish we sell, the blue chip we keep or IPO in Singapore.
MONEY: with the current debt crisis and country defaults, banks are getting weaker they need to consolidate their assets to face the debt losses (even the USA is downgrading), cut their losses in countries that cannot repay their debts and raise capital. this is what they call a flight to quality. Vietnam will need to wait... European banks are being attacked their share value goes down 30-50%, where do you think the top Asian bank will buy partnership? BNP Paribas or Vietinbank?
The cleaning up will need to be done from inside, will the State bank maintain the TRUST?-
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