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BAY looks to secure Vietnam toehold
Bank of Ayudhya (BAY) is exploring opportunities in Vietnam’s consumer finance market in line with its parent Bank of Tokyo Mitsubishi UFJ’s (BTMU) policy to deepen the group’s reach in Southeast Asia.
Thailand’s fifth-largest lender by assets is weighing several options such as setting up its own business, partnering with local players, and mergers and acquisitions in Vietnam, Thakorn Piyaphan, head of Krungsri Consumer Group, BAY’s unsecured loan unit, told the Bangkok Post.
The bank has explored business opportunities in the country for two years and is in talks with some Vietnamese financial institutions for a possible partnership or acquisition, Mr Thakorn said. The firms are not the largest consumer finance players in Vietnam, he said.
If BAY wants to acquire a business in Vietnam, it wants to hold the lion’s share of assets to have management control, he said. There is no time frame for a deal to be completed.
The Thai bank has a footing in Cambodia, Laos and Myanmar through its overseas branch and consumer finance networks. In January 2017 it acquired the entire stake in Hattha Kaksekar Ltd (HKL), Cambodia’s fourth-largest microfinance lender. HKL’s personal loan portfolio continued to increase from 14.9 billion baht at the end of March to 15.7 billion in September.
In Laos, BAY has two branches in Vientiane and Savannakhet, while Krungsri Leasing Services offers personal and auto loans there. The bank’s consumer finance unit plans to expand its services to Pakse.
BAY also has a representative office in Myanmar. For Vietnam, BTMU holds a sizeable stake in Vietnamese VietinBank.
BTMU, which owns a 76.9% stake in BAY, has a clear mission to use the Thai bank as a springboard to expand into the Indochina market and serve its Japanese customers who are shifting their manufacturing base to the region.
Mitsubishi UFJ Financial Group, the parent of BTMU, in late December agreed to take a 73.8% stake in PT Bank Danamon Indonesia Tbk, a mid-sized Indonesian bank.
“We have strong expertise in the consumer finance business, but we lack market knowledge in Vietnam,” Mr Thakorn said. “We need business partners with a strong customer base and platform in financial areas to facilitate our business expansion.”
Given the limited number of consumer finance lenders in Vietnam, BAY has few choices for potential partners. The situation also presents business opportunities, as Vietnam has high economic growth, a population of 100 million and a growing middle class. Vietnam’s largest consumer finance lender dominates the market at 60%.
BAY shares closed yesterday on the Stock Exchange of Thailand at 39.25 baht down 75 satang, in trade worth 40.3 million baht.
Source: https://www.bangkokpost.com/business/finance/1390702/bay-looks-to-secure-vietnam-toehold