Bank mergers and acquisitions will help businesses access cheap capital

DNHN - Former deputy director of the State Bank of Vietnam's Strategy Institute (SBV), said that mergers and acquisitions (M&A) in the banking sector will help businesses. access to cheap capital...

Evaluation of the fact that Vietnam Prosperity Commercial Joint Stock Bank (VPBank) has just reached an agreement to sell 15% of shares to Sumitomo Mitsui Banking Corporation (SMBC) - belonging to Sumitomo Mitsui Financial Group, Inc. SMFG) of Japan through a private placement, Mr. Pham Xuan Hoe, former deputy director of the State Bank of Vietnam Strategy Institute, said that the Japanese side is seeing a very potential Vietnamese market. The difficulties and challenges of the Vietnamese financial sector are opportunities for Japanese businesses.

According to Mr. Hoe, Vietnam's financial market is in its nascent stages of development, and SMBC has identified enormous potential in the consumer finance market. Japan has participated a lot in the retail market of Vietnam and this is also a huge producer of consumer goods. Japan wants to create a financial ecosystem to support Japanese businesses investing in Vietnam. If opening a new foreign bank completely in Vietnam, it will be much more difficult.

“I think Vietnam's financial market still has a lot of restructuring, bringing benefits to domestic enterprises because they will be better managed and have access to cheaper capital sources. Mergers and acquisitions (M&A) in the banking sector will help Vietnamese businesses access cheap foreign capital," Hoe said.

Sharing about the difficulties in accessing loans for enterprises, Mr. Hoe affirmed that the cash flow of enterprises is exhausted, so accessing capital for businesses is very important. Small and medium enterprises have almost no access to interest-supported loans because they do not have enough financial transparency. The policy of interest rate support for small and medium enterprises is considered to be open but is actually "tied up".

“Businesses want to restructure debt to continue living. Therefore, the SBV needs to have stronger solutions in terms of policies. In particular, the SBV needs to assign the initiative in debt restructuring to the boards of commercial banks to continue lending to businesses capable of restructuring, "said Mr. Hoe.

According to Mr. Hoe, the most basic thing about the policy is not to make a one-time policy. Just handle the situation for adaptation. For example, Circular 08/2022/TT-NHNN on the order and procedures for banking supervision does not solve the basis of investment in corporate bonds.

All new bond issuers must meet international standards. Must be rated credit rating, must achieve certain coefficients. Once the credit rating of corporate bonds has been determined, investors will immediately discuss all bonds from AAA to BBB. Administrative intervention in the market is ineffective.

“The SBV needs to have a more effective mechanism in the solution to support interest rates for businesses. It is necessary to transfer 50% of the capital in the support package of nearly 40 trillion VND for businesses to the guarantee fund for small and medium enterprises. That fund belongs to the whole country because currently, the capital in local funds is running around inefficiently," suggested Mr. Hoe.

According to Mr. Hoe, the guarantee mechanism for businesses must be an unsecured guarantee. When businesses have accumulated sufficient points, rating associations require them to have a mortgage guarantee but no collateral. Commercial banks now will re-evaluate the collateral every 6 months, but no business can meet it.

Hoai Anh