A customer at a bank in Hanoi. (Photo: nld.com.vn) According to PricewaterhouseCoopers (PwC), the financial services(FS) industry’s need for digital capabilities, combined with sustained pressurefrom regulators and disruption from platforms and fintechs, means M&A willcontinue to be a driver for transformation.
It also explains why FS is second only to technology, media andtelecommunications (TMT) in terms of M&A investment, accounting for almosta quarter of deal value in the first half of 2022. A continued focus ontechnology, the growing demand for sustainable investment options, and lowervaluations will keep M&A activity high during the second half of this year.
Ong Tiong Hooi, PwC Vietnam’s Partner, said: “Despitemacro-economic headwinds, 2022 will be another robust year for M&A transactionsin Vietnam. M&A activities continue to attract a lot of attention fromforeign investment funds. We're seeing an acceleration of strategic decisionsto enhance portfolio optimisation, as dealmakers divest to free up capital tofocus on acquiring capabilities and transforming core business areas throughM&A."
According to Ong, Vietnam's economic recovery remains strong withGDP growth for 2022 forecast at 6.5%, much higher than the growth forecast forthe Asia Pacific region at 4.4%.
In addition, he said, with supportive regulations and policies forinvestors, the second half of 2022 is providing an opportunity for dealmakersto reassess strategy and act boldly.
"Dealmakers are adapting to a new business climate in which,short-term volatility in financial markets, inflationary pressures, rapidlyrising interest rates, supply chain disruptions and geopolitical tensions allappear to be developing into longer-term trends.
"That is the time for true leaders and best-in-class dealmakersto make bold moves and set the stage for the next five years, meeting thetargets that matter most to their business or portfolio. M&A could be theway to pursue opportunities that deliver value in a challenging economy."
Yoshisawa Toshiki from Aozora bank also said M&A activitieswill increase sharply after the pandemic, of which M&A in finance andbanking in Vietnam will be better, thoibaonganhang.vn reported.
Currently, the Vietnamese Government has policies such asequitising State-owned enterprises and banks, and restructuring weak,undercapitalised and substandard banks. This is an opportunity for foreignorganisations to make investments. Japan’s medium-sized banks are alsoconsidering the financial market and M&A in Vietnam, Toshiki said.
A banking expert, who declined to be named, also shared there aremany factors expected to attract foreign investors to M&A activities in thenear future. Despite being under a lot of pressure, Vietnam is stillcontrolling inflation well, while economic growth is recovering strongly withhigh consumer demand. When the economy grows positively, banking activitiesalso prosper as banks are able to expand their credit and boost retailactivities.
In order to increase the attractiveness for foreign investors toparticipate in M&A deals in the banking sector, experts recommended theGovernment loosen the foreign ownership room in domestic banks. Expandingforeign ownership not only helps banks increase capital but also makes foreigninvestors feel secure to invest more in the Vietnamese market. However, theexpansion should be given only to reliable foreign investors, who have beenproven as large banking and financial institutions in developed countries.
According to experts, with transparent and reputable financialinstitutions, if their ownership rate increases, they can use their financialand governance strengths to help domestic banks recover well and ensure healthydevelopment. Vice versa, if their ownership rate is too low, they will notfocus much on the banks to enable significant changes./.
VNA
