Thailand’s KBank in talks to buy Vietnam lender in up to $1B deal
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Thailand’s second-biggest lender Kasikornbank is in talks to buy consumer finance provider Home Credit Vietnam in a deal of up to $1 billion that would further its push to expand in Vietnam, two sources said.
The Bangkok-based lender, also called KBank, hopes to become one of Vietnam’s top 20 banks in terms of assets by 2027. It has total assets worth $119.7 billion, second only to Bangkok Bank in Thailand, Refinitiv data showed.
The news comes at a time when Vietnamese banks are under pressure as a slowing economy and protracted turmoil in the real estate sector have stoked an uptick in bad loans and triggered broad rate cuts.
A potential deal would underscore a trend of consolidations in Asia’s finance sector and make KBank’s the second-largest M&A transaction in Vietnam’s financial industry this year after the sale of a $1.5 billion stake in Vietnam Prosperity Joint Stock Commercial Bank to Japan’s Sumitomo Mitsui in March, according to Refinitiv data.
KBank has talked to financial advisors to explore the potential acquisition, according to the two sources, although deliberations are still ongoing and no final decision has been made.
“KBank is currently operating KBank Biz Loan solution, a credit service for small-scale retail stores. The potential deal with Home Credit will enable the bank to promote access to financial services for small business clients,” said one of the sources familiar with the matter.
The sources declined to be named as the matter is private.
KBank and Home Credit Group did not respond to Reuters‘s requests for comments.
“The potential deal with Home Credit will enable the bank to promote access to financial services for small business clients,” said one of the sources familiar with the matter.”
Vietnam, home to more than 100 million people, possesses a fast-growing working-age population where KBank estimated that over 69% of the population has no bank account, the highest in Asia.
In June, the Thai lender obtained the Vietnamese central bank’s approval to raise its core capital for its business in the country to $285 million from $80 million, to become its second-biggest foreign bank.
It had set a target of $400 million in net income, with outstanding loans of 180 billion baht ($5.13 billion) and customer base of 8.4 million in the country within 2027.
Home Credit Vietnam, part of Netherlands-headquartered non-bank financial institution Home Credit Group, started operations in the Southeast Asian country in 2008 and has grown to now employ 6,000 staff serving 12 million customers, according to its website.
Besides cash loans, the company offers installment loans to buy motorbikes and consumer durables. It has 9,000 outlets in Vietnam, its website shows.
Home Credit Group is controlled by the Czech Republic’s biggest investment group, PPF, which was founded by late billionaire Petr Kellner. It reported a wider loss in the first half of 2022, mainly due to the impact from the sale of Russian operations.
Questions & Answers
Q.Why is KBank interested in acquiring Home Credit Vietnam?
Why is KBank interested in acquiring Home Credit Vietnam?
KBank hopes to expand in Vietnam and believes this deal will help it promote access to financial services for small business clients. This acquisition would support its goal of becoming one of Vietnam's top 20 banks by assets by 2027.
Q.What challenges are Vietnamese banks currently facing?
What challenges are Vietnamese banks currently facing?
Vietnamese banks are under pressure due to a slowing economy and turmoil in the real estate sector. This has led to an increase in bad loans and broad interest rate cuts across the industry.
Q.What is Home Credit Vietnam's current market presence?
What is Home Credit Vietnam's current market presence?
Home Credit Vietnam serves 12 million customers and employs 6,000 staff across the country. It operates through 9,000 outlets, offering cash loans and instalment loans for motorbikes and consumer durables.
Q.What is the potential size of this acquisition compared to other deals in Vietnam?
What is the potential size of this acquisition compared to other deals in Vietnam?
The potential deal, valued at up to $1 billion, would be the second-largest M&A transaction in Vietnam’s financial industry this year. The largest was a $1.5 billion stake sale in Vietnam Prosperity Joint Stock Commercial Bank in March.
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