Japanese M&A on the rise
Recently, Sumitomo Mitsui Trust Bank (SMTB)—the largest trust bank in Japan with total assets of US$585.4 billion—has bought 49% of BIDV Financial Leasing Company and renamed it BIDV-SuMi TRUST Leasing Limited Company. The joint venture took place as an expansion of their strategic cooperation since 2013.
According to a VIR source, another investor from Japan is negotiating to buy 49% of VPBank Finance Company Limited (FE Credit). These two examples evidence Japanese investors’ attention on the Vietnamese financial market and Vietnamese banks’ interest in cooperating with them.
Previously, Military Bank (MB) transferred 49% of Mcredit Consumer Finance Company’s shares to Shinsei Bank and HDBank transferred 49% of HDFinance’s shares to Credit Saison Co., Ltd. Le Huu Duc, chairman of MB’s board of directors, said the reason for the cooperation was that Japanese investors “have the advantage of modern technology and experience in consumer finance.”
Because of the interest from Japanese investors and their strong finances, there are more cooperation deals in the making. Currently, numerous banks and financial companies in Vietnam, including giants like BIDV and soon maybe Agribank, are calling for investment from strategic foreign investors.
Increasing cooperation with Japanese investors
Besides transferring shares, a range of big Vietnamese banks also cooperate with Japanese banks to look for business opportunities as Japanese FDI is increasing.
At the end of February 2017, BIDV signed a memorandum of understanding (MoU) on serving Japanese customers in Vietnam with Fukuoka Bank, the 16th biggest bank in Japan. Similarly, VietinBank and Vietcombank also signed dozens of MoUs with Japanese partners. In particular, Vietcombank signed with approximately 60 Japanese banks.
Following the trend, other commercial banks also seek Japanese partners and have even established a new service called Japan Desk to support clients form Japan. Besides VietinBank, Vietcombank, and BIDV, Sacombank, HDBank, TPBank, and others offer this service.
“There are more and more Japanese firms entering the Vietnamese market. The two countries have similar cultures and retail banking strategies, so the cooperation can promote both parties’ strengths and often results in high efficiency,” said a leader of Sacombank.
Japanese clients require perfect and diversified services, while capital and the range of services in Vietnam is limited. One can expect an increasing trend of teaming up among Japanese and Vietnamese banks in the coming time. This will be beneficial for all parties.