Financial services industry insiders are upbeat about takeover activity in their sector, a new survey shows.
Thirty-eight per cent of the Vietnamese financial services executives said they expected financial services mergers and acquisitions (M&A) to increase significantly over the following 12 months, according to a new PricewaterhouseCoopers (PwC) survey.

The Asian average is a much lower 23 per cent. The survey, conducted during May and June with 375 senior executives in financial services across 12 Asian territories also found that respondents from Vietnam were positive about their own organisations’ appetites for deals.
Although more than a third of the people interviewed said their firm’s strategic direction has not been decided, 38 per cent saw a material M&A transaction as being “most likely” during the coming year. The tally for Asia is 27 per cent.
Financial services M&A in Vietnam for 2010 were worth $69 million, according to PwC. Deals worth $45 million related to securities and capital markets. The banking sector chalked up $11 million as did the insurance market. The mutual funds and asset management segment notched up $3 million in M&A activity.
This combined total was significantly lower than 2009’s total deal value figure of $211 million, which included HSBC’s additional investment in life insurer Bao Viet – a deal worth $105 million.

Most financial services M&A deals in the first half of 2011 related to sales of equity in securities companies which have suffered significant losses recently because of declines in the local stock market indices and low liquidity levels on the two bourses.
One of the largest deals in the first half of the year saw German insurer Ergo snaffling up a strategic minority stake in GIC, a local general insurance company. The PwC survey also shows Vietnamese respondents are among the most confident in Asia when it comes to their organisations’ domestic growth prospects. Half of the Vietnamese respondents said they expected growth greater than 10 per cent. The average figure for Asia was 37 percent.
No Vietnamese respondent expected negative growth while the figure for Asia was 5 per cent.
“This underlines the attractions of Vietnam for foreign entrants. The banking sector offered outstanding growth potential, and tighter capital regulations could represent an opportunity for targeted inbound investment,” PwC said in its survey report.
The surveyed Vietnamese financial services senior executives also highlighted the importance of market share growth. PwC said this was a reminder of the fragmented local banking sector and its strong potential for consolidation with 53 per cent of respondents citing market share and growth as the primary motives for M&A in Vietnam. The percentage for Asia is 55 per cent. New business lines and geographic expansion were cited by 28 per cent and 25 per cent of respondents, respectively as the primary motives for M&A.

Vilaf