More bank M&As expected in 2012, says HSBC expert

CA - Despite initial difficulties, there will be more bank mergers and acquisitions (M&A) in 2012 and they will happen swiftly, according to an HSBC expert.

Despite initial difficulties, there will be more bank mergers and acquisitions (M&A) in 2012 and they will happen swiftly, according to an HSBC expert.

In a recent interview granted to the Vietnam Investment Review, HSBC Vietnam CEO Sumit Sutta stressed that the State Bank of Vietnam’s decision to merge three commercial banks in late 2011 shows the country’s strong resolve to restructure its banking system.

He pointed out difficulties the banking system is encountering implementing the restructuring process. Accordingly, big stakeholders will be put at a disadvantage as a consequence of M&As and they will try to prevent the process.

Sutta said restructuring the banking system is not just simply a matter of merging small banks with larger banks, but optimizing their operational efficiency as well.

The central bank is now requiring greater transparency in financial reports from commercial banks in order to introduce appropriate solutions for specific cases. It is hard to create effective remedies if bank reports are not transparent, he said.

The CEO also noted that merging banks is not as easy as it was several years ago because small banks’ operational and financial scales are now quite different.

However, he said he believes that with their potential financial capacity and managerial experience, foreign banks are willing to support the central bank and commercial banks in their restructuring process.

The CEO revealed that HSBC Vietnam is increasing cooperation with two of its strategic partners: the Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and Bao Viet Bank.

If the central bank gives the green light, Sutta said HSBC Vietnam will expand its transaction network across the country in 2012, providing clients with premium products and services.

It will help Vietnamese businesses seek overseas partners and foreign businesses sound out opportunities in Vietnam.

Although its full financial report for 2011 will not be released until March 2012, last year was a successful year for HSBC Vietnam as its pre-tax profit in the first half hit US$82 million, up 116 percent against the same six-month period in 2010.