Monday, June 17, 2019 3:27:28 PM - Markets open
VN-INDEX 946.95 -6.66/-0.70%
HNX-INDEX 103.50 +0.04/+0.04%
UPCOM-INDEX 54.97 -0.08/-0.14%
M&A wave set for banking sector in 2020
VietnamPlus - 3/18/2019 1:06:17 PM
 (0 ratings. You must sign in to rate.)
2020 is believed to be a do-or-die year for banks since the SBV has decreed that they must all meet global capital adequacy norms, according to analysts. 
 
A wave of mergers and acquisitions (M&A) thus appears imminent.
 
According to Circular No 41/2016/TT-NHNN, banks must have a capital adequacy ratio (CAR) of at least 8 percent from January 1, 2020, as stipulated under BASEL II standards.
 
Basel II is the second edition of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on banking supervision.
 
Four years ago, the central bank selected the first 10 commercial banks to pilot Basel II standards. But to date only VIB and Vietcombank have joined the pilot scheme successfully while other lenders involved in the plans failed.
 
Analysts said to meet Basel II standards banks need to increase their capital but many, particularly the smaller lenders, have found it difficult to do so.
 
Last year, 18 out of the country’s 34 banks received approval from their shareholders to hike their capital, with their combined increase expected to be nearly 63 trillion VND (2.74 billion USD).
 
But only a few of them, mainly large and medium-sized ones, realised these plans. 
 
Analysts pointed to certain reasons for others’ inability, one of which was the plunging stock market, which has spooked investors.  
 
In raising capital on the stock market, small banks are always at a disadvantage compared to big ones. Their shares are less attractive to investors because their dividend yields are low.                            
 
Another difficulty facing the banks is that the Government requires State-owned companies to pull out of non-core businesses including banks.
 
Foreign financial institutions are cautious about investing because of the unstable global financial situation. Because of this, many prefer to open a branch or establish a subsidiary rather than buy stakes in Vietnamese banks.
 
Banks that cannot increase their capital to the prescribed level would have only one option: to minimise their risk-weighted assets. 
 
This means they would have to reduce credit growth.
 
Banks in the country still derive their revenues mainly -- 70 and 80 percent -- from credit activities.
 
With revenues and profits down, it would be harder for them to mobilise capital.
 
Small banks might have to accept being merged with or acquired by other banks, sparking a new wave of M&As in the industry, analysts said.-VNA
 
Read original article here
 
Newer News
14/06 Reference exchange rate down 1 VND on June 14
12/06 Reference exchange rate down 5 VND on June 12
10/06 Cross-ownership in the banking system almost resolved
10/06 Deposit interest rates jump as banks compete with strengthening greenback
08/06 Banks face big capital burden despite dividend plan
07/06 Reference exchange rate down 2 VND on June 7
06/06 Reference exchange rate adjusted up by 8 VND on June 6
05/06 Central bank enhances measures against loan sharks
04/06 Reference exchange rate adjusted down by 8 VND on June 4
03/06 Reference exchange rate down at week’s beginning
Older News
15/03 Reference exchange rate up 5 VND on March 15
14/03 Reference exchange rate revised up on March 14
13/03 Credit growth expands 0.77 percent in two months
13/03 Reference exchange rate goes down 2 VND
12/03 Reference exchange rate revised down 1 VND
11/03 Reference exchange rate maintains rising trend
09/03 Foreign investment in banking sector to surge
08/03 Reference exchange rate continues to rise
07/03 Reference rate continues to stay stable
05/03 Reference exchange rate continue rising
 
Newsletter Signup
Top Stories
Government to crack down on trade fraud
Reference exchange rate adjusted up by 8 VND on June 6
VAMC to reclaim US$2.13 billion in bad debts
HCM City: 46.8 percent of FDI goes to property sector
Vietnam Pepper Association not hopeful of global price recovery
Market Update
Last updated at 3:10:12 PM
VN-INDEX 946.95 -6.66/-0.70%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Portfolio
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.