Hanoi (VNS/VNA) – Mergers and acquisitions (M&A) in the banking sector are expected to remain high for the rest of the year as the sector continues the process of digital transformation, experts say.
According to PricewaterhouseCoopers (PwC), the financial services (FS) sector’s need for digital capabilities, combined with continued pressure from regulators and platform and fintech disruptions, means that mergers and acquisitions will continue to drive transformation. .
It also explains why FS is just behind technology, media and telecommunications (TMT) in terms of M&A investment, accounting for almost a quarter of deal value in the first half of 2022. A continued focus on technology, growing demand for sustainable investment options and lower valuations will keep M&A activity high in the second half of this year.
Ong Tiong Hooi, Partner at PwC Vietnam, said, “Despite the macroeconomic headwinds, 2022 will be another robust year for M&A deals in Vietnam. Mergers and acquisitions activities continue to attract the attention of foreign investment funds. We are seeing an acceleration of strategic decisions to improve portfolio optimization as dealmakers divest to free up capital to focus on building capabilities and transforming core business areas through mergers and purchases.”
According to Ong, Vietnam’s economic recovery remains strong with GDP growth for 2022 forecast at 6.5%, well above forecast growth for the Asia-Pacific region at 4.4%.
Additionally, he said, with investor-friendly regulations and policies, the second half of 2022 offers traders an opportunity to reassess their strategy and move boldly.
“Traders are adjusting to a new business climate in which short-term financial market volatility, inflationary pressures, rapidly rising interest rates, supply chain disruptions and geopolitical tensions all appear to be escalating. transform into longer-term trends.
“Now is the time for true leaders and best-in-class dealmakers to take bold action and set the stage for the next five years, achieving the goals that matter most to their business or portfolio. Mergers and acquisitions could be the way to seize opportunities that bring value in a difficult economy.”
Aozora Bank’s Yoshisawa Toshiki also said M&A activity will increase sharply after the pandemic, which M&A in finance and banking in Vietnam will be better, thoibaonganhang.vn reported.
Currently, the Vietnamese government has policies such as the privatization of state-owned enterprises and banks and the restructuring of weak, undercapitalized and substandard banks. It is an opportunity for foreign organizations to make investments. Mid-sized Japanese banks are also eyeing the financial market and mergers and acquisitions in Vietnam, Toshiki said.
A banking expert, who declined to be named, also said many factors are expected to attract foreign investors to M&A activity in the near future. Despite heavy pressure, Vietnam is still keeping inflation well under control, while economic growth is picking up strongly with strong consumer demand. When the economy experiences positive growth, banking business also thrives, as banks are able to extend credit and boost retail business.
In order to increase the attractiveness for foreign investors to participate in M&A transactions in the banking sector, experts recommended the government to loosen the margin of foreign ownership in domestic banks. The expansion of foreign ownership not only helps banks increase their capital, but also makes foreign investors feel safe to invest more in the Vietnamese market. However, expansion should only be granted to reliable foreign investors, who have proven themselves as major banking and financial institutions in developed countries.
According to experts, with transparent and reputable financial institutions, if their ownership rate increases, they can use their financial and governance strengths to help domestic banks recover well and ensure healthy development. Conversely, if their shareholding rate is too low, they will not bet much on the banks to enable significant changes./.