On August 25th, 2021, Saigon – Hanoi Commercial Joint Stock Bank (SHB) signed agreements to transfer charter capital at SHbank Finance Company Limited (SHB Finance) to Bank of Ayudhya in Thailand, (SET: BAY), commonly known as Krungsri – a strategic member of the Mitsubishi UFJ Financial Group (MUFG). Accordingly, when the two parties fulfil the certain conditions and meet the requirements as prescribed by law and obtain the approval of the State Bank of Vietnam as well as relevant regulatory agencies of Vietnam, Thailand, and Japan, SHB will transfer 50% of SHB Finance’s charter capital to Krungsri and will continue to transfer the remaining 50% after 3 years.
The transfer agreement of SHB Finance will bring a significant capital surplus to SHB’s shareholders as well as improve the financial capacity and SHB’s reputation. The strategic cooperation between the two banks of the scale and position of Top 5 in Vietnam and Thailand will open up opportunities for regional development and reach out to the world.
Attractions of the potential consumer finance market
Not only helping the economy gets more effective credit, contributing to the development of Vietnam’s financial system in promoting non-cash payments, but consumer finance companies also help people access to easier sources of official loans, join hands to repel black credit.
In more than 10 years of development, Vietnam’s consumer finance has increasingly shown its potential and has a lot of room for growth with a population of more than 98 million people, a young population with an average age of 32.9 years. Consumer credit outstanding at the end of 2020 is about VND 1.8 million billion, accounting for about 20% of total outstanding loans of the economy, 2.5 times higher than 2012. In 2021, many experts forecast demand for consumer credit is likely to continue to grow strongly, possibly by about 13-15%.
This is the reason why in the past, many domestic banks have repeatedly revealed their plans to “hunt” and acquire financial companies. Meanwhile, foreign investors also showed special interest in Vietnam’s consumer finance market. And certainly, mergers and acquisitions in this sector will be exciting in the coming time.
SHB in strategic cooperation with Krungsri: A development opportunity with regional and global outreach
Being in the top 10 consumer finance companies in Vietnam, SHB Finance is evaluated with a lot of growth potential and strengths, with a charter capital of VND 1,000 billion, 100% owned by SHB Bank – one of the licensed companies with the highest charter capital in the market. After negotiation, on August 25, 2021, SHB signed agreements related to the transfer of charter capital in SHB Finance to Krungsri – a strategic member of MUFG. Accordingly, when the two parties meet the requirements as prescribed by law and obtain the approval of the State Bank of Vietnam and relevant regulatory agencies of Vietnam, Thailand, and Japan, SHB will transfer 50% of SHB’s charter capital Finance to Krungsri and will continue to transfer the remaining 50% after 3 years.
Krungsri is the fifth largest financial group in Thailand in terms of assets, loans, and deposits in which Mitsubishi UFG Financial Group (MUFG) holds 76.88% of the capital. MUFG is the Japan’s largest financial group and one of the world’s largest financial organizations. MUFG also has a lot of experience in operating in the Vietnamese market, holding 20% of strategic shares in a large domestic bank in Vietnam and has contributed to the bank’s impressive development in the Vietnamese market in recent years.
In Thailand, Krungsri provides a comprehensive range of banking, consumer finance, investment, asset management, and other financial products and services to individual consumers, SMEs, and large corporations through 656 branches and transaction offices in Thailand, meeting all needs of customers and society with sustainable growth.
Mr. Do Quang Hien – Chairman of the Board of Directors of SHB said: “The consumer finance market in Vietnam has great potential and room for growth. SHB Finance is a “beautiful girl” with healthy financial health. After a period of selection and negotiation, we have found a suitable partner to contribute to bringing synergistic value in many aspects such as management experience; technology; improve financial capacity; network expansion, and new product development, international cooperation, enhancement of SHB’s reputation and brandname in the region and in the world.”
Krungsri President & CEO Seiichiro Akita said, “We are very pleased to announce that we have signed agreements with SHB to acquire a 100% stake in SHB Finance, SHB’s consumer finance subsidiary, upon closing of the transaction after all regulatory approvals are obtained. SHB’s local expertise and an extensive network in Vietnam complemented by Krungsri’s strength in consumer finance will enhance SHB Finance’s business competitiveness. Together, we will develop and deliver quality consumer finance products to customers in Vietnam. This milestone also underscores our commitment to ASEAN Expansion Strategy following our current medium–term business plan covering 2021–2023.”
SHB and Krungsri are both banks with a large network of branches and transaction offices in Vietnam, Thailand and Southeast Asia, commensurate in terms of position and potential. With strengths in consumer finance, especially experience in Digital Banking and Fintech, Krungsri will resonate with SHB to break new goals, create different products, transform strongly, and digitize to create convenience and provide the best service to customers. Both sides commit to contribute to promoting the growth potential of Vietnam’s consumer finance market, bringing greater value to customers, shareholders and partners.
In particular, with a vision to be Top Retail Banks, SHB and Krungsri both expressed their desire to combine their comprehensive ecosystems apart from the consumer finance business.
After 28 years of establishment and development, SHB is currently in the Top 5 largest joint stock commercial banks in Vietnam. As of June 30, 2021, SHB has total assets of more than VND 458 trillion. The current charter capital is more than VND 19,260 billion. Owner’s equity reached VND 40,425 billion. SHB has grown strongly with nearly 8,500 employees working at 537 domestic and foreign transaction points, serving more than 5 million individual and corporate customers and connecting to 400 correspondent banks across the world.
After the successful merger of Habubank, SHB is focusing its resources and making a strong breakthrough, becoming one of the banks with the highest return on equity (ROE) in the system of Vietnamese commercial banks today. SHB’s goal is to become the number one joint stock commercial bank in terms of efficiency and technology by 2025, with a vision to 2030 to become the leading modern retail bank in the region. To realize this objective, SHB is determined to comprehensively innovate with appropriate strategic initiatives, strongly transform towards digital technology and banking modernization.
About SHB Finance
After more than 3 years of operation, SHB Finance has covered the market in 46 provinces and cities; serving almost 300,000 borrowers and was rated B3 by Moody’s – Stable outlook. SHB Finance aims to become one of the pioneering financial companies applying technology to quickly meet urgent financial needs, while improving service quality and convenience for customers.
Krungsri (Bank of Ayudhya PCL and its group companies) is the fifth largest financial group in Thailand in terms of assets, loans, and deposits, and one of Thailand’s five Domestic Systemically Important Banks (D-SIBs) with 76 years of history in the country. Krungsri is a strategic member of the Mitsubishi UFJ Financial Group (MUFG), Japan’s largest financial group and one of the world’s largest financial organizations. Krungsri provides a comprehensive range of banking, consumer finance, investment, asset management, and other financial products and services to individual consumers, SMEs, and large corporations through 656 domestic branches (617 Banking Branches and 39 Auto Business Branches) and over 32,406 service outlets nationwide. The Krungsri Group is the largest card issuer in Thailand with 9.6 million credit cards, sales finance, and personal loan accounts in its portfolio; a major automobile financing service provider (Krungsri Auto); one of the fastest growing asset management companies (Krungsri Asset Management); and a pioneer in microfinance (Ngern Tid Lor).
Krungsri is strongly committed to the highest level of integrity in conducting its business. All Krungsri Group companies have been awarded accreditation from the Private Sector Collective Action Coalition Against Corruption (CAC) in collaboration with industry peers and stakeholders on a zero tolerance approach to corruption.