adminThe deal aims to boost “support for Japanese companies operating in Vietnam”, Bank of Tokyo-Mitsubishi UFJ president Nobuyuki Hirano said yesterday, and to tap Southeast Asian markets after seeing its profits tumble this year.
The Japanese bank last month reported profit in the six months to September dived 58 percent year-on-year to US$3,6 billion, due partly to declines in stock holdings.
VietinBank, or Vietnam Joint Stock Commercial Bank for Industry and Trade, said the majority of its shares will still be owned by the State Bank of Vietnam but it described the deal as “the largest ever M&A (mergers and acquisitions) transaction” in Vietnam’s banking sector.
After a decade of rapid and chaotic bank liberalisation, Vietnam now has 42 domestic banks. Many are overloaded with toxic debt, much of it held by inefficient and poorly-managed state owned companies.
The government has renewed a high-profile anti-corruption drive, going after heads of failing state enterprises and wealthy banking tycoons to ease rising public dissatisfaction over the slowing economy.
Analysts stress the need to woo more foreign players into the banking sector to inject new cash and bring greater expertise. Earlier this month, Moody’s downgraded Vietnam’s credit rating from “B1” to “B2”, citing weaknesses in the banking system that may hit medium-term growth, and “an elevated risk” of a costly government banking bailout. — AFP.
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