Vietnam has recently emerged as the “focal point” for M&A (mergers and acquisitions) deals in the consumer finance sector. A series of transfers worth trillions of Vietnamese dong have appeared in quick succession—from SeABank selling 100% of PTF to Aeon Group, Home Credit transferring its Vietnam arm to SCBX, to Krungsri acquiring the remaining 50% stake in SHBFinance. These moves raise numerous questions about the market’s appeal, the M&A strategies of foreign investors, and why many local banks have simultaneously decided to divest from finance companies.
In the article “Is the Consumer Finance Slice Still Appealing?” (“Miếng bánh tài chính tiêu dùng có còn hấp dẫn?”), published in The Saigon Times by author Triệu Minh, the main causes, market context, and core strategies behind these prominent M&A deals are analyzed. Vilasia has summarized some key points as follows:
1. Market Context and Growth Potential
Demand Remains High Despite Rising Bad Debts
Recent developments reveal a paradox: consumer bad debts are at a high level and the population is aging faster, yet many domestic banks have opted to divest from finance companies. However, experts argue that there remains ample room for growth, because:
- Low Penetration of Formal Consumer Finance
Many people are still unfamiliar with consumer loans from finance companies or the use of credit cards. The low adoption rate leaves a large “gap” in the market. - Changing Consumer Behavior
Trends in online shopping, installment payments, “buy now, pay later” (BNPL), and the use of e-wallets and fintech are growing rapidly. This evolution demands more sophisticated development of consumer finance products and services. - Attractive Profitability
Compared to mortgage lending or corporate lending, consumer lending carries higher interest rates and thus higher net interest margins (NIM). While bad debt risks are also higher, if managed properly, the segment can still deliver robust long-term returns.
Notable Deals
- SeABank transferred PTF to Aeon Group for 4,300 billion VND. PTF was previously acquired by SeABank from VNPT in 2018 and currently has 1,550 billion VND in charter capital, nearly 2,000 employees, and serves 200,000 customers.
- Home Credit sold 100% of Home Credit Vietnam to SCBX (Thailand) for 866 million USD. This is the second-largest M&A deal for a finance company, after FE Credit (49% stake sold to SMBC in 2021).
- Krungsri—the fifth-largest bank in Thailand—completed the acquisition of 100% of SHBFinance, demonstrating its strategy to expand in Southeast Asia.
- Lotte Card (South Korea) spent around 1,700 billion VND to buy Techcom Finance from Techcombank in 2018, paving the way for other major Korean players to enter the market.
These deals do not signal that the market’s growth potential has been “exhausted,” but rather reflect a process of market restructuring. Foreign conglomerates are willing to “spend” to secure an early competitive edge, while local banks focus on optimizing core banking activities.
2. Why is M&A a Strategic Choice?
2.1. For Foreign Conglomerates
- Rapid Market Entry
Acquiring existing finance companies helps them bypass the complicated licensing process and the creation of an entirely new corporate structure. They instantly gain an established customer base, distribution channels, technological infrastructure, and trained personnel. - Leveraging the Ecosystem of Local Banks
If the local bank retains a certain ownership share or forms a strategic partnership, the foreign acquirer can “tap into” the local bank’s ecosystem (customer lists, payment platforms, credit data, etc.) to develop consumer finance products. - Technological and Experiential Advantages
Foreign finance conglomerates typically possess modern technology—such as AI-based credit scoring and big data analytics—to optimize loan approvals and manage bad debts. They also have experience in scaling quickly from similar markets in the region.
2.2. For Local Banks
- Focusing Resources on Core Businesses
Running a consumer finance company requires specialized resources in risk management, credit-scoring technology, and debt collection. Many banks find that heavily investing in this segment may be less efficient compared to strengthening their traditional commercial banking services. - Increasing Capital and Improving the Capital Adequacy Ratio (CAR)
Selling a finance company can deliver a windfall in M&A proceeds, boosting equity capital and thus improving the bank’s CAR. This is particularly important as many banks strive to meet and upgrade to Basel II and III requirements. - Reducing Operational Costs
Operating a standalone finance company incurs substantial expenses, from management to marketing. As competition intensifies—especially with established players—banks may want to restructure, “offload the burden,” and optimize their overall operations.
