ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter
Companies

Vietnam's HDBank taps into state oil group through acquisition

On heels of IPO, move follows Hanoi's call for bank sector consolidation

HDBank intends to add many new offices around Vietnam after acquiring PG Bank.

HO CHI MINH CITY -- Vietnam's HDBank will acquire a Petrolimex-backed peer, part of the newly listed lender's strategy to expand its reach and secure its position as one of the country's leading retail banks.

The share-swap deal for Petrolimex Group Commercial Joint Stock Bank, approved by shareholders of both lenders Saturday, is expected to be completed by August, a document sent to the shareholders shows.

HDBank, known officially as Ho Chi Minh City Development Joint Stock Bank, will raise its charter capital beyond 12.8 trillion dong ($564 million) with the acquisition, up from 9.8 trillion dong. The bank's float on the Ho Chi Minh City Stock Exchange will grow to more than 1.2 billion shares from 981 million.

Nguyen Thi Phuong Thao, vice chairwoman of HDBank, told shareholders Saturday that the lender signed a 10-year strategic partnership with state-owned Vietnam National Petroleum Group, or Petrolimex, the country's biggest fuel distributor.

Besides acquiring the lender known as PG Bank, HDBank will be the main provider of financing for projects carried out by Petrolimex and its subsidiaries. Petrolimex's network in Vietnam spans over 2,000 filling stations and 4,000 agents, serving more than 20 million consumers.

Approaching the group's customers will let HDBank strengthen its financial ecosystem, ranging from fuel and gas consumers to passengers of Vietjet Air, Thao said.

PG Bank ranks among Vietnam's smaller financial institutions, which face difficulties in meeting capital standards and competing against other lenders. Vietnam's government ordered Petrolimex to restructure PG Bank and gradually divest from this lender.

Petrolimex, which owns 40% of PG Bank, will have just a 5.62% stake in the new entity, gradually shrinking its holding to under 5%.

PG Bank last year proposed a merger with Vietnam Joint Stock Commercial Bank for Industry and Trade, or VietinBank, one of the four biggest state-owned lenders in Vietnam. But disagreements over benefits, growth prospects and shareholder interest halted the process despite lengthy discussions.

HDBank and PG Bank share development strategies and investment profiles, focusing on retail banking. The acquisition will enhance HDBank's client network of individuals and small and midsize enterprises, deputy general director Le Thanh Trung told the Nikkei Asian Review.

The integrated lender aims to double its representative offices and transaction points nationwide from around 240 now, and to serve more than 20 million customers in the next three years.

Trung called mergers and acquisitions an important part of expanding HDBank's network. The lender has undergone successful integrations during its 27-year history, including with both DaiABank and Societe Generale Viet Finance in 2013.

In the past five years, the Vietnamese banking system has seen at least five mergers among lenders, including Mekong Housing Bank and Bank for Investment and Development of Vietnam.

More integrations will be carried out by 2020 in order to enhance the competitiveness of local lenders, Vietnamese banking expert Can Van Luc told Nikkei.

(Nikkei)

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media