Acquisitions rise in consumer finance

Beyond finance, retail is a top focus for entities like AEON, which has placed over $1 billion into the sector, photo Le Toan

AEON Financial Service, a member of Japanese retailer AEON Group, two weeks ago acquired Postal Finance Company (PTF) from SeABank, a subsidiary of local conglomerate BRG Group.

The acquisition cost around $181.4 million, marking a significant expansion in the Vietnamese financial sector.

Established in 1998, PTF was one of the first non-bank credit institutions in Vietnam. In 2018, Vietnam Posts and Telecommunications Group divested its entire stake in PTF to SeABank.

Following the transfer to SeABank and subsequent restructuring, PTF focused on developing various lending services and expanded its network and business partnerships, placing a special emphasis on applying technology.

PTF boasts a charter capital of $65.4 million, nearly 2,000 employees, and services close to 200,000 customers across 30 provinces and cities.

A representative from SeABank said the divestment would provide the bank with additional resources to enhance financial capacity, expand operations, invest in technology, and promote business activities in key segments.

Post-signing, SeABank disclosed that both parties would seek approval from relevant authorities and the State Bank of Vietnam (SBV) to finalise the transaction.

Beyond finance, retail remains another focus of AEON Group in Vietnam. The conglomerate has invested over $1.18 billion in the country, the largest investment by the group globally.

Currently, AEON boasts six shopping centres in major Vietnamese cities such as Hanoi, Haiphong, and Ho Chi Minh City. It also plans to inaugurate a new shopping centre in the central city of Hue next year.

Before AEON’s acquisition of PTF, there was speculation that AEON might purchase the consumer finance arm of Military Commercial Joint-Stock Bank (MSB), FCCOM. The rumours emerged as part of the wider discussions in the financial sector about potential consolidations and acquisitions.

During MSB’s AGM in April, CEO Nguyen Hoang Linh said they had been actively talking to numerous seasoned foreign financial institutions to explore options for offloading MSB’s stake in FCCOM. However, the endeavour faced hurdles.

“The evolving global and Vietnamese economic landscape, particularly the outward investment flows and the SBV raising deposit interest rates, significantly impacted our initial negotiations. These developments, causing a market-wide stock price plummet, unavoidably influenced the initial offers from prospective investors, delaying the divestment process within 2022,” Linh said.

To protect shareholder interests, MSB has reassessed multiple new approaches. “We are not discounting any options, including potentially revising FCCOM’s strategic orientation. Anticipating more conducive market conditions, we hope to revisit and potentially reactivate our divestment plan in the next year,” Linh added.

Meanwhile, in August, Thailand’s second-largest lender Kasikornbank (KBank) was reportedly in advanced negotiations to acquire Home Credit Vietnam for up to $1 billion. Reuters also revealed that KBank was focusing on expanding its credit services to small-scale retail stores.

The agreement with Home Credit could significantly boost services to small traders in the Vietnamese market, a KBank spokesperson said. Despite exploring various business opportunities in Vietnam, the outcome of these transactions remain uncertain.

Home Credit Vietnam, a wholly foreign-owned enterprise under the Czech-based PPF Group, holds the second-largest market share in Vietnam’s consumer lending sector. It employs around 6,000 staff and serves a customer base of approximately 15 million, primarily focusing on low-income individuals without a credit history or those unable to access or meet traditional banking standards.

This acquisition, if successful, would be a significant step for KBank as it seeks to diversify its services and expand its footprint in the burgeoning Vietnamese financial market.

The move highlights the dynamic nature of Southeast Asia’s banking and financial services industry, where established players are increasingly seeking cross-border opportunities to fuel growth in a highly competitive environment.

According to Fitch Ratings, consumer finance firms are currently facing various escalating risks associated with an increase in non-performing loans. In the first half of this year, the ratio among licensed financial companies rose to 13 per cent, up from 11 per cent in the previous year.

Confusion compounded by consumer finance apps Consumer finance companies in Vietnam are facing significant challenges due to negative aggressive debt collection practices and unlicensed debt trading applications.

Economic conditions taint consumer finance prospects The challenges facing the consumer finance sector have become evident this year, as numerous companies reported declining business results in the first half.