After the merger of three banks in last December, merger and acquisition (M&A) among banks in Vietnam will become very active this year, the local online newspaper Dau Tu (“Investment Review”) quoted Sumit Dutta, CEO of HSBC Vietnam, as saying.

However, Sumit Dutta pointed out four major challenges that would block M&A activities in the country’s banking sector.

Firstly, the country has a number of newly-established small banks. When it comes to merger with other big lenders, major shareholders of small banks will be at disadvantaged and thus they will try to avoid or postpone the merger.

Secondly, restructuring the banking system does not simply involve bank M&A but also how to improve the health and soundness of large banks.

Thirdly, financial statements and reports of local commercial banks are not transparent, making it difficult for the State Bank of Vietnam (SBV) to diagnose precisely the health of each credit institution to devise appropriate measures.

Fourthly, small banks have recently become larger in scale as compared to several years ago. As a result, merger between among banks might not be easy as it used to.

 

Source Sophie/ StoxPlus