The impacts of exchange rate on the balance of trade in vietnam

Thepracticalapplicationofthestudy

Intheperiodfrom2006topresent,Vietnamesebanksectorhasstanded outwiththegiganticboomcreatingaveryattractiveprofitability level.A tthee n d o f 2 0 0 6 , t h e averagea f t e r - t a x p r o f i t rateo n t h e a v e r a g e c a p i t a l o f t h e commercialb a n k sa v e r ag e d from17%to1 8 % , somer e a c h e d 3 0 % T h e importerswereverydifficulttob uytheU.Sdollar,oriftheycouldpurchase,thep r i c e w a s alsoveryh i g h I n a shortterm, thee x c h a n g e raterose andfellirregularlycausingconsiderableinfluencesonbusinessofexportingenterprises.

T h e stockmarketdroppedseriouslydespiteoftheadministrativeinterventionsoft h e go vernment,currencywasscarceonthismarket,liquiditywaslow,interestr a t e o ntheinter-bankmarketreachedto40%/ yearatsometimes.Bankshadtoseek capitalsource byraisingin te res t ratesto adizzy levelcreatingaraceon d e p o si t interestratesamongcommercialbanks.

Recent shifts in the banking sector have led some banks to offer daily deposit interest rates as high as 20% per year, prompting a transfer of funds from domestic banks to others without significant growth in credit deposits Businesses are struggling to secure capital from local commercial banks, while foreign bank branches have increased their lending activities, gradually capturing market segments Additionally, foreign banks are raising their ownership stakes in Vietnamese joint-stock commercial banks This trend highlights the pressure on Vietnamese banks amid international economic integration, raising concerns about their competitiveness and survival as the market approaches full opening.

0 0 3 … B a n k acquisitionandmerger aretakingplaceconstantlyintheworldshowsthatthisisnotarandomphenomenonbutat rendinthecontextofinternationaleconomicintegrationandglobalization.Bankshavefo undsignificantbenefitsfromtheirmerger.Modernbankingrequiresalargescale,strongp otentialtohaveenoughcompetitivecapacityanddevelopnewproductsandservices,enha ncetheutilityoffinancialproducts,reducecosts,improveoperationalefficiency.Thesma llandweakbanks whichdonothave enough resourcesfortechnological innovationandproductutilitydevelopmentwilllosemarketsharegraduallyandeasilybel eftbehindintheincreasinglydrasticallycompetitiveenvironment.Inevitableresultofco mpetitionisthatthesmallerbanksareeasilyacquiredandmerged.Atthesametimeforthel argea n d mediumjointstockcommercialbankswhichwanttoincreasemarketshareand competitivepotential,thereisnomoreeffectivewaythanunitingtogetherintheformofm ergertobecomeastrongfinancialcorporationorbigjoint- stockcommercialbankthankstoforceuniting.

Startingfromt h o s e o b j e c t i v e r e q u i r e m e n t s , i t i s n e c e s s a r y t o h a v e t h e studyonjointstockcommercialbankssector,mergerandacquisitionm arketinV i e t n a m andintheworldaswellastheapplicationofbusinessfinancialkn owledgei n t o a n a l y s i s a n d a s s e s s m e n t o f t h e c o m p e t i t i v e n e s s o f j o i n t s t o c k commercialb a n k s t o p r o p o s e t h e s o l u t i o n ofb a n k a c q u i s i t i o n a n d mergertoincreasecompetitivenesscapacity.

Theaimofthethesis

Firstly,toclarifytheconceptsofacquisitionandmerger;implementationmet hodso f b a n k a c q u i s i t i o n a n d merger;t h e b e n e f i t s a n d drawbackso f acquisiti onandbankmergerbusiness;

Secondly,t o d i s c u s s t h e c o m p e t i t i v e n e s s o f t h e j o i n t - s t o c k c o m m e r c i a l b a n k s i n V i e t n a m ; a n a l y z e t r e n d s o f b a n k a c q u i s i t i o n a n d m e r g e r a r o u n d t h e wo r ld inordertodrawthetrendforjointstockcom mercialbanksinVietnam;

Topicandscopeofstudy

Topicso f s t u d y fort h i s t h e s i s a r e t h e m a t t e r s o f e n t e r p r i s e a c q u i s i t i o n a n d mergerintheworldandinVietnam,inthecompetitivenessoftheViet namjointstockcommercialbanks.

ThesisfocusedonthecompetitivenessofVietnamjointstockcommerci alban ks, thee nt er pr is e a c q u i s i t i o n an dmergerbusinesses Basedo n t h o s e researches,itisproposedinthethesisthesolutionofbankacquisitionandmergeri nordertoraisecompetitivenessoftheVietnamjoint- stockcommercial,a n d alsothesolutionstoimplementsuccessfullyandeffectivelyban kacquisitiona n d mergerbusinesses.

ResearchMethods

• Useofhistorical- statisticalmethodandsynthesismethodtocompareandassesst h e competitivenessofthe Vietnamjoint-stockcommercialbanksrecently.

Structureofthethesis

Overviewofacquisitionandmerger

Acquisitionandmergeris theconceptusedtorefertoa companyseeks toholdthecontroloveranothercompanythroughacquisitionofalloralargeper centageofth e numberofsharesorassetsofthetargetcompanyenoughtobeableto mastera l l thedecisionsofthatcompany.Afterfinishingthetransfer,thetargetcompa nyterminatesits operation(merged)or becomes asubsidiaryofthe bidder.Brands oft h e t a r g e t company,ifis assessedas stillbeingvaluabletomaintainproductshare,isretainedasanindependentbrand,orbeco mbinedasacommonbrand.

A hostile takeover occurs when an acquiring company attempts to gain control of a target company without the approval of its management board This type of acquisition can negatively impact the target company and may also lead to repercussions for the acquirer The process typically involves the bidder purchasing shares from disaffected shareholders or gradually acquiring shares in the market when consent from the target company's management cannot be obtained As a result, shareholders of the target company may receive cash or swapped stock, ultimately losing their control over the company.

- Friendlytakeoverisanactivitywhichiswelcomedandsupportedbythem a n a g e m e n t board of t h e t ar get c o m p a n y T he acq uis it io n mayderivefr om the com moninterestofbothparties.

- Thebuyerpurchasestheassetsof thetargetcompany.Theamount thatthetargetcompanygainsfr om th e sa l e of s h a r e s w il l b e re tu rn ed tosh a r e h o l d e rs t hr ou gh dividends orliquidity.Thiskindoftransaction leavesan emptiedcorporationto thetargetcompany,ifthebuyerbuysupalltheassets.Thebidderoftenstructuresthetrans actionasapurchasedasset.

A horizontal merger occurs when two companies that operate in the same market and offer similar products join forces This type of merger aims to expand market reach, combine brand strengths, reduce fixed costs, and enhance the efficiency of distribution and logistics systems By merging, competitors not only eliminate rivalry but also gain increased power to negotiate with remaining competitors A notable example of this is the merger between Exxon and Mobil, which cost $78.9 billion in 1998.

- Verticalmergera r e b e t w e e n t w o c o m p a n i e s l o c a t e d o n t h e samev a l u e c h a i n , leadingtot h e e x p a n s i o n a h e a d o r b a c k w a r d s o f t h e mergedc o m p a n i e s o n t h a t v a l u e chain.Theacquisitionofthistypeisclassifiedintotwogroups:

+F o r w a r d merger:t h i s b u s i n e s s t a k e s p l a c e w h e n a c o m p a n y p u r c h a s e s t h e c o m p an y distributingitsproducts,forminganewcompanywit hparticipationina l m o s t c l o s e d value chain,suchaswhenthegasproduction companybuysthegasd i s t r i b u t i o n company, anewcompanywillbeformedwiththecapacitytoproducea n d delivergastotheconsumer s.

A backward merger occurs when a company acquires its supplier, enhancing its operational scope and business model For instance, in 1993, Merck, the world's largest pharmaceutical company, acquired Medco Containment Services, a leading prescription drug distributor, for $6 billion This acquisition transformed Merck into the largest pharmaceutical manufacturer and distributor, despite concerns from anti-monopoly regulators While Merck viewed this merger as an opportunity to improve medication delivery to patients, it faced backlash from manufacturers reliant on distributors This example illustrates how a company can benefit from acquiring a similar business, particularly in the medication manufacturing and marketing sector.

A pure conglomerate merger involves companies that operate in completely unrelated industries A notable example is Philip Morris, which acquired General Food Company in 1985 for $5.6 billion, followed by the purchase of Kraft in 1988 for $13.4 billion, and Nabisco in 2000 for $8.9 billion Recently rebranded as Altria, the company has shifted its focus from tobacco to food, leveraging cash flow from its diverse sales This strategic pivot is largely due to the declining U.S tobacco industry, which has experienced an average annual decline of 2.5%, despite the global tobacco market remaining stable.

+G e o g r a p h i c e x p a n s i o n mergeri s a f o r m o f mergerb e t w e e n t w o c o m p a n i e s p r o d u c i n g t h e s a m e p r o d u c t b u t c o n s u m i n g int w o c o m p l e t e l y s e pa r a t e m a r k e t s geographically.Atypicalexampleforthisformofmergeris thebusinesswhichtheDaiichideal-

Japanese acquisitedtheBaoMinhCMG.Daiichi – thepartnercarryingouttransferringandjoint- venturelifeinsurance,isthesecondlargestlifeinsurancec o m p a n y i n J a p a n – w h e r e i s t h e s e c o n d l a r g e s t marketo f thel i f e insuranceinthew o r l d D a i i c h i i s r a n k e d ast h e s i x t h l a r g e s t l i f e i n s u r a n c e companyintheworld in termofan nu al ly grosspremium revenue.Immediatelya f t e r t h e t r a n s f e r w a s completed,t h e c o m p a n y w a s re namedast h e D a i i c h i l i f e insurancecompanyofVietnamandimproveditsbusinessoperationstomeetthedemand ont h e l i f e i n s u r a n c e o f V i e t n a m e s e c u s t o m e r s T h e o t h e r d e a l i s t h e N a n j i n g AutomobileCompany(China)acquisitedUKMGRoveratth epriceof50millionpounds.

+P r o d u c t d i v e r s i f i c a t i o n mergeri s a f o r m o f mergerb e t w e e n t w o c o m p a n i e s p r o d u c i n g twodifferentproducts,butwithanapplicationofproductiontechn ologyorsimilarmarketingway.

AnothertypicalexampleoftheconglomeratemergeristheGeneralElectricCo mp an y ( GE),GEdidaworkthatmanyothercompanieswerenotsuccessful– itwasdiversificationofbusinessindustriestocreatevalueforshareholder s.GE istheserialacquisitionscompanywhichhasbeenverysuccessful.

Methodof bankacquisitionandmergerimplementation

Thewaytocarryoutbankacquisitionandmergevariesdependingonthem anagem entviewpointofthesides,objectives,ownershipstructureandtheadvant ages of eachpartyineachspecificcase.However,accordingtotheacquisitiona n d merg erb u s i n e s s e s int h e w o r l d , t h e methodo f b a n k ac q u i s i t i o n a n d mergerimple mentationincludesnegotiationwiththeBoardofDirectorsandE x e c u t i v e Bo ard,collectionofstocksonthesecuritiesmarket,purchaseofassets,tenderoffer,engagi ngdisaffectedshareholders

Thisisquitelargelymethodinbankacquisitionandmergerbusiness.Whentwo b a n k s f i n d t h e p o t e n t i a l c o m m o n i n t e r e s t s o f t h e mergero r t h e y p r e d i c t t h e i r o u tst an d i n g d e v e l o p m e n t p o t e n t i a l o f t h e banka f t e r t h e merger,t h e E x e c u t i v e Board will sitdowntogethertonegotiate amergercontract.Somesmall andweakbanksinthecontext ofeconomiccrisisautomatically seektothe lar ger banktoproposeamerger.Atthesametimetheaveragebanksalsoseekoppor tunitiestomerget o g e t h e r t o f o r m a l a r g e r b a n k w h i c h i s s t r o n g e n o u g h t o overcomet h e d i f f i c u l t i e s ofthecrisistimeandimprovecompetitivenesswithforeig nbanks.

Thea c q u i s i t i o n p r o c e e d s f r o m t h e l a r g e r b a n k s o r fromc o m p e t i t o r s T h e b a n k intendingtoacquisitecarriesoutcollectingsharesg r a d u a l l y onthesecuriti esmarketorreceivingthetransferofstrategicinvestorsandthesmallshareholde rs.Whencollecting enoughquantity ofs t o c ks f ro m thetargetbanks t oconv ene anE x t r a o r d i n a r yGeneralS h a r e h o l d e r s 'Meet in g,ac q u i r i n gba nk a skf o r a meetinga n d offeredbuyingallremainingsharesoftheshareholders.

Thismethodrequiresalongtime,moreover,iftheintentionisdisclosedoutside,t h e targetbank’ssharepricewillbeabletorocketupinthemarket.Conversely,ift h i s istak enplacegradually andsmoothly,t h e acquiringbankcanachievetheirg o a l s peacefullywithoutcausingmajordisturbancetothetargetbankswhileonlypaysam uchlowerpricethantheotherways.

Bankorindividual ori nv est or groupintendingto acquirethe wholetarget bankproposesshareholdersofthebanktoselltheirstocksatthepricemuchhigherthanit sv a l u e i n t h e market.B i d p r i c e mustb e a t t r a c t i v e e n o u g h f o r t h e m a j o r i t y o fshareholderstoapprovetheabandonmentofthepropertyaswellasmanagementrightsto theirbank.

Public tender offers are typically used in hostile takeover situations among competitors, where acquired banks tend to be weaker institutions However, there are instances where smaller banks successfully "swallow" larger competitors by leveraging significant external financial resources to facilitate the takeover Banks executing takeovers in this manner usually mobilize funds through various strategic financial channels.

(b)raisingcapitalfromexistingshareholders,throughtheissuanceofnews h a r e s orpay dividendsinshares,issuingconvertiblebonds,

(c)loansfromcreditinstitutions.N o t a b l y , int h e d e a l o f p u b l i c t e n d e r , t h e t a r g e t b a n k m a n a g e m e n t b o a rd losestherighttodecide,becausethisisadirectexcha ngebetweenacquiringbanksa n d s h a r e h o l d e r s o f t h e t a r g e t b a n k s , w h i l e t h e m a n a g e m e n t b o a r d

In a typical acquisition scenario, only representatives without sufficient affected shares are excluded, while the management board and key positions of the target bank are usually replaced Although the brand and organizational structure may be retained, they are not necessarily fully integrated into the acquiring bank, establishing a parent company-subsidiary relationship To counteract the disadvantages of a merger, the target bank's management can seek stronger financial guarantees and offer shares at a premium price to existing shareholders, a strategy known as a "shark repellent."

This method closely resembles the public tender process, where a bank can unilaterally or collaboratively with the target bank assess the property's value, often relying on independent property valuation consulting firms Following this assessment, the involved parties negotiate to determine a suitable price, which may differ from the initial valuation Payments can be made in cash or debt However, a significant drawback of this method is the challenge of valuing intangible assets, such as brands, market shares, customer systems, human resources, and business culture, which complicates agreement between parties Consequently, this approach is typically utilized for acquiring smaller banks, focusing on the transaction site, portfolio, staff, real estate, and client systems associated with the target bank.

This method is commonly employed during hostile takeovers when a business is in a weak and loss-making situation, leading to a group of disaffected shareholders eager to change the Board of Directors A bank with a competitive advantage can leverage this scenario by acquiring a significant number of shares in the target bank, thus becoming shareholders With this support, they can convene a General Meeting of Shareholders to remove the existing board and elect new members aligned with their interests It is crucial to note that the acquiring bank can influence the terms of the Board of Directors from the outset, as the ultimate goal is to facilitate a board change that benefits both the bank and the dissatisfied shareholders.

Thebenefitsanddrawbacksofbankacquisitionandmerger

Twoormorebankmergedwillmakealargerscaleoncapital,people,numberofb r a n c h e s Fromthattheyc a n c r e a t e t h e a b i l i t y o f p r o v i d i n g c a p i t a l f o r larg erp r o j ect s w h i c h r e q u i r e l a r g e a n d extendedc a p i t a l a n d w i t h c o m p e t i t i v e i n t e r e s t rate.Furthermore, withthe increasinginthe number ofbranches,themergedbankw i l l meetthegrowingneedsofcustomersinabetterway.

Themergerwillleadtoareductionofthebranchesoftwoormorebankshavingthesameoperat ionareasbeforetomaintaina branch,transactionofficefromwhicha numberofstaff,officere ntalexpenses,salariesofstaff,operationalcostsofbranchesandtransactionofficeswillbecut. Operatingcostsreduced,revenueincreasedwouldbefactorstomaketheperformanceoftheb ankafterthemergerbetter.

Also,twoormoreindividualbankshave different productswhenco m b i n a t i o ns , theywillcre ate t h e us e o f d i f f e r e n t p r o d u c ts supportingo r r ep lac in g e a c h ot he ran d thenwillincreasetheutility ofba nk productsand services a f t e r the mergerw h i c h w i l l a t t r a c t morecustomers,t h e v a l u e o f t h e s e r v i c e a n d p r o d u c t w i l l increaseleadingtoincreasinglyhigherperformanceandthebank 'sgrowth.

Each bank possesses unique business features that, when combined, allow them to leverage and complement one another effectively For instance, a small bank focusing on clients from small and medium enterprises can partner with a larger bank that specializes in lending to individuals and small businesses This collaboration enables the small bank to offer tailored loan products for employees of these enterprises, maximizing their inherent advantages Additionally, when a small bank merges with a larger institution, it gains access to resources that facilitate the development of new services, such as foreign currency trading offices, which require significant investments in technology, human resources, and risk management capabilities Consequently, post-merger, these smaller banks are better positioned to enter markets and offer products that were previously beyond their reach.

The merged bank will inherit the customer systems of both banks prior to the merger, allowing for the provision of previously unavailable products and services, which will enhance customer engagement and increase revenue Additionally, if one of the banks has branches or transaction offices in areas where the other does not, it can attract customers from the other bank to offer its products, eliminating the need to establish new branches that require significant time and investment Consequently, the overall effectiveness of the merged bank will surpass the combined efficiency of the two individual banks.

In late 2007 to early 2008, Vietnamese commercial banks aggressively raised interest rates, especially following meetings of the Vietnam Banking Association and the State Bank in February 2008 Despite the repeal of the ceiling interest rate, which allowed rates to exceed 150% of the base rate, some banks continued to offer deposit rates over 19% per year for 12-month periods Notably, SCB Bank and Eximbank competed fiercely, offering rates as high as 20% per year This intense competition highlighted the severe pressure on interest rates faced by commercial banks in Vietnam amid economic challenges Despite this, public deposits in the banking system did not see significant growth, and banks frequently shifted deposits among themselves Consequently, as smaller, weaker banks merged with larger institutions, the number of commercial banks in Vietnam began to decline.

V i e t n a m w o u l d ber e d u c e d , t h e n competitivep r e s s u r e o n i n t e r e s t r a t e s w o u l d d r o p , f i n a n c i a l s t r e n g t h w a s improved,thenitwouldbehard fortheraceinterestrateshappenedsimilarlyinF e b r u a r y 2008.Thesmallerbankswo uldbeacquiredbythelargebanksfromthatthelargerbankswasformed,themobilizingc ostswouldbedroppedsignificantlycomparingb e f o r e t h e merger,w h i c h h e l p e d t h e performanceo f b a n k s b e t t e r , leadingtoincreasedcompetitivenesseno ughtoovercomethedifficulteventsoftheeconomy.

The rapid development of Vietnam's banking sector, particularly among mass commercial banks, has led to a scarcity of skilled human resources in finance and banking Newly established banks require a solid core staff with experience in the financial sector and strong management skills To build effective teams, banks often engage experienced staff from established institutions Additionally, as banks expand their operations, they must recruit for new branches or transaction offices, resulting in the shifting of human resources between banks The year 2007 marked a peak in this scarcity, making it challenging for banks to recruit quality staff, prompting them to seek talent from competitors.

Sowhentwoormorebankmerger,itwillcreatealargenumberofstafftoselectan d for manewandpotentiallypowerfulteam,bankcanimplementnewbusinessstrategieswi thsectors,productsandservicesthattheycouldnotdobeforedueto lackofhumanpowersuchasforeigncurrencytrading,optionsproducts Sincet hen,itso w n s t r e n g t h o f t h e b a n k a f t e r t h e mergerw i l l b e c r e a t e d , o p e r a t i o n e f f e c t i v e n e s s willgrowsharplywhichleadstoincreasingability topursuegoalssu ch a s t o p - r a n k i n g r e t a i l b a n k i n g i n V i e t n a m , t h e l a r g e s t f i n a n c i a l g r o u p inV i e t n a m

Themergeo f b a n k t o g e t h e r c a n t a k e a d v a n t a g e o f b u s i n e s s o n a l a r g e s c a l e , reducesthecostsfortheexpansionofoperationscope,cutstheexc essofi ne f f i c i en c y workers,utilizessystemforcustomerstodevelopproductsth atsupporta n d e x p a n d t h e b u s i n e s s , n e w p r o d u c t s Whentheyh a v e moreg o o d p eo ple, t h e p e r f o r m a n c e o f t h e b a n k afterthemergerw i l l i n c r e a s e , l e a d i n g t o v al ue of bankassetsrises,thevalueofshareholderassetsincreasesalsoso thatthebank'ssharepriceafter themergerwillbetrustedbytheexistingshareholders,andtherewillhavemoreinvestorsapp reciateandpayconcernover.

Therefore,t h e m e r g e r i s n o t simplyt h e sumo f v a l u e o f t w o o r moreb a n k s together,iftheseadvantagesaretaken,thevalueofthebankafterthemergerwillb e ma nytimeslargerthanthearithmeticsumofthemergedbanks.

During the bank acquisition and merger process, minority shareholders often face significant challenges as their benefits and opinions can be overlooked in shareholder meetings, where their votes are insufficient to influence decisions If dissatisfied with the merger plan, they may sell their stocks, likely at a loss, as the stock price typically declines as the merger approaches completion Additionally, their voting power diminishes post-merger due to an increase in the total charter capital, resulting in a smaller percentage of voting rights compared to before Consequently, minority shareholders find themselves with fewer opportunities to voice their opinions in shareholder meetings.

After a merger, the bank will operate with greater equity, resulting in major shareholders of the acquired banks losing some control due to a decrease in their voting rights The influence of bankers in shareholder meetings diminishes, and their ability to elect the Board will also be reduced With a larger number of board members, elected shareholders will have limited rights compared to before Consequently, major shareholders may seek to unite to regain control over the merged bank, leading to ongoing competition until all parties are satisfied Additionally, the merger introduces leaders from different banks, creating a mix of personalities that may clash due to differing interests This dynamic can lead to conflicts where individual bankers prioritize their interests over those of the majority shareholders, perpetuating a cycle of rivalry within large financial corporations.

Businessc u l t u r e s h o w s t h e s p e c i f i c c h a r a c t e r i s t i c s o f e a c h firm,r e f l e c t i n g t h e distinctivef e a t u r e s o f t h e f i r m w h e n c o m p a r i n g w i t h o t h e r s T h a t d i f f e r e n c e i s reflectedintheintangibleassetssuchasloyaltyofe mployee,workenvironment,treatmentofemployeesto leadership andother staff, thebehaviorofemployeestocustomers,b e l i e f s o f stafft o t h e managersa n d v i c e v e r s a T h e r e f o r e b u s i n e s s c u l t u r e createsgreatlyvaluablecompetitiveadv antageforanybusiness.Business cultureiscreatedovertime,withthetirelessdevelopmentprocessofstaff,formedbased onthecorevalues ofthebusiness.Lackof capital, businesscanmobilizef ro mv a r i o u s s o u r c e s ; l a c k o f p e r s o n n e l , b u s i n e s s c a n g e t fromm a n y f o r m s o f recruitmentbutlack businessculture,businesscan notmakeovernight.Therefore,w h e n mergingtwo ormorebankstogether,inevitablythevarious featuresoftheseb a n k s arenowgatheredinthenewconditions,theleadersofthebanksn eedtothet h ew a y t o h a r m o n i z e d i f f e r e n t typeso f s e p a r a t e b u s i n e s s c u l t u r e s towardsa commonbus inessculturetoall.Staffwillfeelconfusedwhenworkinginanewe n v i r o n m e n t withstyleofmixedbusinesscultures,alsotheymustfindthewaystoa d a p t tochanges inthewaytocommunicatewithcustomers,with thestafftofromo t h e r banks;theirbelieftoleadershipwillbechangedalso,theyhaveto maintaint h e o l d b u s i n e s s c u l t u r e , o n t h e o t h e r h a n d , theyh a v e t o r e c e i v e o t h e r b u s i n e s s cultures.Ifth e board does notfind amethodofcom bi ni ng h a r m o n i o u s l y optimally,itwilltakealotoftimetobeaunitiveandfirmentityfromdif ferentb u s i n e s s e s withmixedbusiness cultures.I f not,staffwillfeelunc onnectedandlosec o n f i d e n c e , t h e b a n k a f t e r t h e mergerw o u l d b e a l o o s e a n d e a s y s p l i t t i n g blockd u e t o t o o manyd i f f e r e n t elementsinu n c e r t a i n c o n j u n c t i o n w h i c h m a k e n e w b u s i n e s s culturechaoticandfragile.

Bank mergers often lead to operational restructuring, resulting in job losses and changes in management positions This can create dissatisfaction among managers who feel unfairly treated or disrespected, potentially prompting them to leave the organization The acquiring bank may struggle to operate effectively if core human resources are lost, as each bank has unique business characteristics that complicate integration Leaders may face challenges in understanding the merged entity's processes, which can damage the bank's performance if key personnel depart Consequently, the new bank's board must carefully evaluate potential losses during the restructuring of the management structure.

Thed i s a d v a n t a g e s o f a c q u i s i t i o n a n d mergermentioneda b o v e a r e t h e e s s e n t i a l p o i n t s ofth e process of ba nk acquisition andmerger.Th e quantificat ionoflos s a n d p r o p o s a l o f s o l u t i o n s i s veryi m p o r t a n t t o limitt h e d a m a g e a n d e n s u r e t h e mosteffectivemerger.

Therelationshipbetweenacquisitionandmergewiththecompetitivenesso f thebank 17 1.5 Theroleofinvestmentbankinginbusinessacquisitionandmerger

(i)financialcapacity:t h e sizeoftotalassets,equitycapitalsizeandindicatorsof businessperformances u c h asquality ofl ia bi li ti es andassets

(ii)humanresources,(iii ) information technology,

(iv)thed i v e r s i t y anduniquenessofproductsandservices,(v)thec l i e n t system

Activityo f a c q u i s i t i o n a n d mergermakesf i n a n c i a l c a p a c i t y o f t h e n e w b a n k s strongerthanthesumofthetwobanks,biggeronhumanresourcessotheyhav econditiont o c h o o s e g o o d st a f f , i n f o r m a t i o n t e c h n o l o g y systemstob e i m p r o v e d d u e t o morea b u n d a n t f i n a n c i a l r e s o u r c e s , s e r v i c e s a n d p r o d u c t s y s t e m i s m o r e diversifieda n d a l s o l a r g e r c l i e n t s y s t e m s fromt h e r e s u l t s o f acquisition andmergerthatwillbringtheincreasingoncompetitivenessofthebanks.

Conversely,whenbankcreatesstrongenoughcompetitiveness,itwillimplyth atw i t h goodfinancialcapacity,bankwantstoincreasefurthermarketshares,andhas betterstaff,thiskindofbankwillseekthetargetbankstoacquisition andmergetomeetitsgoals.

Therefore,a c q u is i t i o n , mergera n d t h e c o m p e t i t i v e ne s s o f b a n k s h a v e c l o s e a n d r eci p r oc al relationship,complementingandsupportingeachother.

Intheworld,everyyear,therearethousandsofbusinessacquisitionsandmergerst a k e n place,includingtransnationalmergerssuchasABNAmroNVoftheNetherlandsa n d BarclaysP L C o f t h e U K , t h e r e a r e someb u s i n e s s e s t h a t l a r g e corporationi s f o r m e d a f t e r t h e mergers u c h a s J P M o r g a n a n d C h a s e becamef i n a n c i a l groupJPMorganChase.Forsuchmergersnormally,investmentbanksa r e thebrokerageandconsultantonpurchasingandselling.

Investmentbanksactasaconsultingagencyinacquisitionandmergerbusinesses,a s t h e i n t e r m e d i a t o r betweent h e buyerands e l l e r , carryo u t thew o r k o f an intermediateagencysuchasconsultancyandintermediation.

Investmentbankshaveadvisorygroups(teamworks),includingtheconsultingexperts,bu sinessfinancialconsultants,lawyers,auditorsperformingworksfromintermediationonbuya ndselltoconsultationoncompletingacquisitionandmerger.Theroleofinvestmentbanksinac quisitionandmergerincludes:

 Theroleofintermediaryonbuyingandselling:Investmentbankhastheteam specializinginseekingandbuildingdatabasesofbuyersandsellerstopreparefort h e need sofcustomers.Whenanycustomeraskstobuyorsellabusiness,then,t h e consult antgroupwillevaluateandselectthepotentialpartnerstoconnecttheparties together Asa brokerage unit, theconsultant teamwill helptheircustomerschoosetargetofbuyorsellmatchingwiththecustomer'srequirements Dependingo n customerrequirements,theconsultantteamoftheinvestmentbanks canparti cip at e inthedealasconsultingunit.

The consulting unit plays a crucial role in facilitating successful mergers and acquisitions by leveraging a team of experts, including financial advisors, lawyers, and auditors Their professional experience in negotiation and contract management allows them to conduct thorough assessments of target units objectively and independently They manage the entire process, from creating detailed plans and overseeing implementation to conducting careful surveys of target units Additionally, they prepare essential documents such as memos and contracts, while providing advisory services on valuation, payment methods, and procedures to ensure a swift completion of the deal.

 Roleo f f i n a n c i n g : f o r thelargea c q u i s i t i o n s o r theac qu ir in g b a n k w h i c h ha s financiald i f f i c u l t i e s t o c a r r y o u t a c q u i s i t i o n a n d merger,t h e y o f t e n f i n d investmentb a n k s toa s k f o r f i n a n c i a l s u p p o r t tosuccessfullyi m p l e m e n t theirgoals.Theinvestmentbankwillassesstherisksofthedealtode terminefundinglevels,fundinglevelswilldependontheacquiredunit,acquiringbankand thesizeo f thedeal.

The Theroleon arbitrage business involves investment banks purchasing shares of a company anticipated to be acquired These shares are held until the acquisition is finalized, at which point they are sold for profit This strategy capitalizes on the expectation that the stock price of the acquired company will rise following the announcement of the acquisition.

T h i s t e r m issimilartot h e termso f r i s k b u s i n e s s (riskarbitrage),peoplewhopurc hasesharesofthecompanywhichissaidt o b e t h e t a r g e t o f t h e a c q u i s i t i o n w i l l s e l l t h o s e s h a r e s a t t h e timet h a t theacquisiti onfinishes tomakeaprofit.Theyhighlyvaluetheabilitytocompleteandtopursuethebusinesswithhig hfeasibility.

Somei n v e s t m e n t b a n k s h a v e t h e i r o w n a r b i t r a g e d e p a r t m e n t H o w e v e r , i f a n investmentbank is consultingtheir clients regardingthe acquisitionofacompany,theymusthavethe

"GreatWall"erectedbetweenthearbitragedepartment andtheconsultantteamsw o r k i n g d i r e c t l y w i t h c u s t o m e r s T h e r e f o r e , a r b i t r a g e w i l l n o t p r o f i t withinformation fromtheconsultantsbutthatdoesn oteasilyexistinthemarket.Profitfromthisinsideinformationisakindofviolationonsecur itieslaws.

Acquisition andmergerintheworld

Int h e l a s t p e r i o d o f t h e 2 0 t h century,w a v e o f a c q u i s i t i o n s a n d mer gerst o o k p l a c e s t r o n g l y i n c o u n t r i e s w i t h d e v e l o p e d e c o n o m i e s Onlyf r o m 1 9 8 6 to1 9 8 9 , i n B r i t a i n t h e r e w e r e a b o u t 5 , 2 0 0 industrialandcomm ercialcompanies,carryingoutacquisitionandmergerwitheachother(onaveragether ewere1,301companieseachyear).The1980sand1990sbroughtthe new waveoffriendlyandh o s t i l e takeoveractivitiesinsomeindustries,whencorporations trytoconsolidatetheirpositionstoadapttochangingconditions.

Alsolatei n 1 9 9 0 s , T r a v e l e r s G r o u p mergedw i t h C i t i c o r p , f o r m i n g t h e largestfinancials e r v i c e s c o m p a n y i n thew o r l d N e x t t o t h e t a k e o v e r w a v e o f JapanesetoU S c o m p a n i e s int h e 1 9 8 0 s , itw a s t u r n o f Germanfirmsb e i n g spotlightin1990whenDeutscheBanktookoverBankersTrust.

Inaddition,inthebankingsector,thereweremanyactivitiesofacquisitionand mergertakingplace.InMay2001,CitigroupFinancialGroupofU.Sa n n o u n c e d t h e l a r g e s t b a n k i n Mexico,B a n a c c i , w i t h a n e n o r m o u s p r i c e : 1 2 5 b illionUSD.

States,alsotheo w n e r ofthegiantcommercialbankCitibank.BBAACorporationofSpai nboughtBancomerBankwhichisthemaincompetitoroftheBanamexbankinMexico.Ont h e otherhand,according tothecalculationof theChairmanofCitigroup Co r p o r at i o n , M r S a n d y W e i l l , fromt h i s merger,thec o r p o r a t i o n w o u l d r e d u c e a n n u a l l y bya t l e a s t 2 0 0 milliondollarsf o r t h e c o s t o f t e c h n o l o g y t r a n s f e r a n d e s p e c i a l l y thelowercostofraisingcapital.

In 2002, a significant merger occurred between the commercial bank Dresdner and the insurance group Allianz in Germany, marking the largest deal in the country This merger combined the strengths of both financial institutions to create a mixed financial coalition aimed at enhancing their financial resources and maximizing advantages Allianz focused on generating maximum revenues through market expansion and retail banking operations, while Dresdner concentrated its resources on financial asset investments The newly formed group positioned itself as a robust entity capable of defending its interests and reaching out to the global financial market with a strong German identity.

An u m b e r o f b a n k m e r g e r s i n T a i w a n : Thef i n a n c i a l c r i s i s w h i r l w i n d i n A si an ar e a has reallyaffectedthebankingfinancialsystemofTaiwansincelateof1999.Withthaturgent situation,theTaipeigovernmentpassedsomelawsc r e a t i n g favorablecondition sforthemergeramongbanksandlaunchedtheo p e r a t i o n modeloftheassetmanage mentcompany.Accordingly,twomergersoflargeb a n k s w e r e a n n o u n c e d : a mergerb e t w e e n T a i w a n c o o p e r a t i v e B a n k a n d commercialbank-

B a n k , P a n A s i a B a n k a n d D a h A n C o m m e r c i a l B a n k T h e mergeru s u a l l y i s t a k e n p l a c e b e t w e e n a b a n k a d m i n i s t e r e d byt h e S t a t e a n d t h e o t h e r weakandsmallbanks.Accordingtosome analysts,themergercouldmakea bankbecomeworsebecausetheyareforcedtomergewithotherweakandsmallbanks a n d itissaidthatthemergercontainsmuchmorepoliticsnature.

Source:BankMergerActivityintheUnitedStates,1994-2012;StevenJ.Pilloff,May2004.

% comparedwith2004.Thenumberofcontractsincreased49%inEuropeand30%i n theU.S.Thelargestcontractofpurchase andmergerin2005wasMitsubis hiTokyoF i n a n c i a l g r o u p i n J a p a n b u y i n g UFJH o l d i n g s B a n k w i t h a n amo unto f U S D 59.1billion.

In2 0 0 6 , B a n c a I n t e s a B a n k a n d S a n p a o l o I M I B a n k a g r e e d o n m e r g e r p l a n tobecomet h e l a r g e s t b a n k i n I t a l y , t h e m e r g e r h a s c o m p l e t e l y c h a n g e d b u s i n e s s e n v i r o n m e n t inItaly,itwasalsoconsideredaneffective measurestostrengthenthec o m p e t i t i v e n e s s t o f o r e i g n b a n k s U n d e r t h e agreement,I n t e s a h a d t o p a y 3,115sharestogeteacholdshareandaprefe rredshareofSanpaolo,whichwasequivalenttoanexchangerateof3.18.Intesa' sstaffbecametheChiefExecutiveO f f i c e r ; BoardChairmanofSapaolobecamet hechairmanofthenewBoardaftert h e mergerwhilethechairmanoftheBoardofInte sabecamethechairmanofthesupervisoryboard.Theanalystsbelievedthatthismerg erconsideredbeingequivalentandverywise.

S t a t e a n d E u ro p e i n 2 0 0 8 w h e n t h e U n i t e d S t a t e h o u s i n g c r e d i t c r i s i s d e v e l o p e d t o b e a b an k in g f i n a n c i a l c r i s i s s p r e a d i n g g l o b a l l y thata f f e c t e d h e a v i l y t h e U S a n d E u r o p e a n banks.Amongthem,its houldbementionedJPMorganChasebuyingB e a r S t e a r ns a t a p r i c e o f $ 2 , b e f o r e theg i a n t JPMorganC h a s e madeseveralacq ui sit io ns andmergerssuchasbu yingBankOnein2004,buyingChaseManhattanBankin2000.

Bythemiddlemonthsof2008,theUnitedStategovernmenthadtosupportbanksa n d fi nancialinstitutionsinthecountrytowithstandthefinancial- bankingcrisisstorm,i n c l u d i n g t h e n a t i o n a l i z a t i o n o f F r e d d i e M a c a n d

F a n n i e M a e b a n k a t a priceofU.S.$200billionto getthecontrolright overthesetwo largestrealestate banksintheUnitedState.Britain,Iceland,Germany, France,Russiaalsoha dtoimplementmeasurest o n a t i o n a l i z e l a r g e b a n k s w h i c h w a s i n d a n g e r o f bankruptcy.

Thes i t u a t i o n o f b a n k a c q u i s i t i o n a n d mergeri n t h e w o r l d s h o w s t h a t a f t e r t h e economicc r i s i s , t h e r e a r e morea n d moreb a n k a c q u i s i t i o n s a n d mer gerst a k e n p l a c e Moreover,eachofbankacquisitionandmergerhasitsownp urposesfromthatthelessonslearnedforVietnamjoint- stockcommercialbanksincarryingoutb a n k acquisitionandmergeristoclearlyde finetheobjectiveinlong- termd e v e l o p m e n t strategy,preparethe acquisition andmergerplancareful lyandusetheservicesofinvestmentbanks.

OverviewpictureontheVietnamjointstockcommercialbanks

Since1988,Vietnam'sbankingsystemhasdevelopedintotwo- tierbankingsy st em inlinewithinternationalpractice.Thetwo- tierbankingsystemconsistsoft h e sy s t e m oftheStatebankandtheIntermediaryB a n k s Statebankisthegovernmentbo dymanagingmonetaryandbankcreditfield,planningthefinancialp o l i c i e s , o p e r a t i n g m o n e t a r y p o l i c i e s , e x c h a n g e r a t e mechanisma n d non- commercialactivities.Intermediarybanksincludethejoint- stockcommercialb a n k s , theStateownedcommercialbanksandnon- bankingcreditorganizations

Thankstothereasonablereform,thebankingsystembecomesmorefl e xible, b a n k i n g b u s i n e s s a c t i v i t i e s i s g r o w i n g , i m p r o v i n g itsc o m p e t i t i v e n e s s capacity,andthuscontributingtobringeconomicdevelopmenttoane wheight.

Apartfromforeignbanksandrepresentativeofficesnewlyestablishedinrecentyears, mostjointstockcommercialbanksestablishedintheearly1990shavemodestinitialcapitals,f rom5to20billiondong.Aftertheoperationprocess,duetolegalrequirementsoftheStatebank

,thecompetitivefactorsinthemarket,theinevitabledevelopmentoftheeconomy,jointstockc ommercialbanksincessantlystrivetoincreasetheirchartercapital,growsignificantlyinbusi nessorganizationssize.

ThecompetitivecapacityoftheVietnamjointstockcommercialbanks 282 2 1 Sizeofworkingcapital

Commercialb a n k s m a k e u p 2 2 % o f t o t a l a s s e t s o f t h e d o m e s t i c b a n k s sector(2006).Thejointstockcommercialbanksarefoundedbydom esticcapitalsources,although some received significantforeigninvestment capitalsource.Thedomesticcapitalsourcesofthejointstockcommercial banks derivedfromStatecommercialbanksandtheprivatebusinesssectormakeincreasin gtherisksoftheinvolvedpartners.

Despite significant growth in recent times, the joint stock commercial banking sector has limited operational scope and small charter capital, ranging from 500 billion VND to 4,500 billion VND This sector often incurs concentrated loans and main business operation costs, which are typically associated with strategic investors and other organizations However, some large joint stock commercial banks have found success by focusing on the retail market and small to medium enterprises, where they have developed a highly competitive capacity.

Twol e a d i n g j o i n t s t o c k c o m m e r c i a l b a n k s , t h e A s i a C o m m e r c i a l b a n k a n d t h e SaigonT h u o n g T i n C o m m e r c i a l B a n k , h a v e g a i n e d s i g n i f i c a n t markets h a r e s , wh i l e t h e s e c o n d g r o u p , i n c l u d i n g t h e T e c h n o l o g i c a l a n d C o m m e r c i a l B a n k o f Vietnam,theVietnamExport-

ImportCommercialJoinStockBank,theVietnamI n t e r n a t i o n a l CommercialJoi ntStockBank,theMilitaryCommercialJointStockB a n k , t h e H a n o i B u i l d i n g

C o m m e r c i a l J o i n t S t o c k B a n k a n d t h e S a i g o n CommercialBank,hasfac edmanychallenges tobeabletobelistedastheleadingcommercialbanksinthe area.Finally,the third commercial bankgroup, including2 7 jointstockcommercialbanks,isfacingwiththeextremelysevereco mpetitivec h al l en g es withtheriskofpotentialannexationalongwiththestrictregul ationonthelegalcapitalstipulatedintheDecree141/2006/ND-CPNovember22,2006.

Althoughencounteringwiththechallengesontheincreasingcompetitivespeedandst rictregulationsonlegalcapital,thejointstockcommercialbankshavemadeeffortstoensuret hestrategicinvestmentcapitalsourcefromaforeignstrategicpartners.Forthejointstockcom mercialbankingsector,thoseinvestmentsourcesareessentialfactorstoachievesustainablec ompetitivecapacityonbrand,productdevelopment,riskmanagement,financialstrengthand professionalmanagementskills.Due to thestrongdevelopmentsituationofVietnamese economyaswellastheprofitabilityofthebankingsector,foreignbankshasbeenreallyinteres tedincontinuingstrategicinvestmentinVietnaminthelasttwoyears,specificallyasfollows:

Targetbank Acquirer Time Holding rate

Vietnam's economy has experienced steady growth of 7% to 8% in recent years, driven by robust global economic trends and the effects of globalization The signing of various bilateral and multilateral agreements has significantly contributed to Vietnam's economic development A pivotal moment in this process was Vietnam's accession to the World Trade Organization (WTO) in November 2006, marking a key milestone in its international integration Consequently, the mobilization of capital to meet the economy's demands has become increasingly important, with funding rising by 33.20% in 2004, 32.08% in 2005, and 36.53% in 2006 Notably, state-owned commercial banks continue to dominate the funding landscape, followed by joint-stock commercial banks.

U S D w a s stable,thecreditorganizationsh a d severalmeasurestoe n h a n c e funding m o b i l i z a t i o n withattractivepromotionprograms.Typicalexampleswerethepr omotionprograms o f the joint stockcommercial ba nk s suchasMilitary C o m m e r c i a l JointStockBankwiththeprogram"Saving-

WinMercedes",HDBankwith "SavinginHDBank,takingGoldprize,"ACB"LuckySpring withACB"

Themarket shareofthejointstockcommercialbankingsectorincreasi ngdram atically from2006showedtherapidgrowthandcompetitivenessincreasinglyd r a s t i c a l l y inthemarket.Sincebytheyear2000–

2011,theStateownedCommercial Bankingsectordidnotfocusmuchonactivities butonstrengtheningf i n a n c i a l c a p a c i t y andc r e d i t q u a l i t y managementt o p r e pa r e f o r t h e equitizationp r o c e s s Inaddition,since theForeign bankings e c t o r a n d theJoint

VentureBankings e c t o r i s l i m i t e d byt h e l e g a l r e g u l a t i o n s r e l a t e d t o act ivitieso f mobilizationdepositsinVNDfromindividualcustomers,theirability toexpendt h e marketshareislimitedtoo.Forallthesereasons,thejointstock commercialb a n k i n g sectoristheonehavingmuchmoreadvantagestoexploit.

Capitaldemandoftheeconomy increasesaccordingtothegrowth speed ,t h u s, t h e d e m a n d f o r c r e d i t c a p i t a l i n c r e a s e s yeara f t e r y e a r D u e t o i n f l a t i o n , g r o w t h trendofcreditoftheeconomycontinuestoslowdown:out standingloanso f thebankingsystemtotheeconomyin2006increased25.44%asc omparedto2 0 0 5 , muchlowerthanthegrowthrateof31.10%in2005and41.65% in2004.T h e slowcreditgrowthspeedisdueto:

(ii) Othermobilizationchannelsincreasinglyextendedsuchasthesecuritiesmarket ,theDevelopmentAssistanceFund(VietnamDevelopmentBank),foreignc a p i t a l (FDI,ODA )intoVietnamincreasedsomewhatimpactontheabilityofe x p e n d i n g creditofthesystemofcreditinstitutions.

Therateofinflationcameupto2digitsin2007andthefirst06monthsof2008.A tthesametime,theStatebankappliedtightmonetarypolicy,increasedr e s e r v e requirementratioto11%,limitedthegrowth ofoutstanding debt forthe wh ole systemat30%f o r 2008,increasedthe baseratefrom8.75%to12%an d14%inJune2008tocurbinflation.

Thet i g h t m o n e t a r y policyo f t h e S t a t e b a n k madet h e b a n k i n g systemr acin g eachothertoincreaseinterestratestoattractidlecapitalintheec onomy.Proportionofloansbyeconomicsectorisrelativelystableovertheye ars.O u t s t an d i n g l o a n o f a g r i c u l t u r e - f o r e s t r y – f i s h e r y i nd ust ry a l t h o u g h t e n d e d t o d e c r e a s e butstillbethehighestpropor tioninthelendingstructureofthebankingsystem,between28%-

30% Itwasfollowedbyindustryandco ns tr uc ti on a c c o u n t e d a t a p p r o x i m a t e l y 2 5 % a n d 1 5 % T h e l e n d i n g p r o p o r t i o n o f t h e commercialindustryc ontinuedtobemaintainedat17-18%oftotaloutstandingloans.

Branchesoft h e For eignbankandJ ointVe ntureBank

In recent years, banks have rapidly developed their operational networks, particularly within the joint-stock commercial banking sector This growth is driven by increasing capital sizes, a robust economy, and a rising demand for transactions from both individuals and legal entities Consequently, network development has become a vital requirement for competition and overall advancement in the banking system, especially in the joint-stock commercial banking sector.

Thej o i n t s t o c k c o m m e r c i a l b a n k s a r e t r y i n g t o e x p a n d t h e i r o p e r a t i o n network,e s p e c i a l l y t h e leadingbankss u c h a s ACB,S T B , a n d T e c h c o m b a n k Somenewbanksshiftingfromruraltourbanbanksals oconstantlyscalesupthenumberofbranchessuchasAnBinhbank,SeaBank Th enetworkdevelopments p e e d ofthosebanksisveryfastandwithtargets.Thenetw orkofthejointstockcommercialb a n k i n g s e c t o r m o s t l y c o n c e n t r a t e i n c i t i e s , u r b a n a r e a s w i t h h i g h l i v i n g standards,sothenewlyestablishedbra nchisofteneffectivesincestart- up.H o w e v e r , banksalsofacedifficultiesinrecruitingstaffforthebranch;factsho ws thatafeveronbankpersonnelcreatedinthesecondhalfof2007toearly2008.T hesesignalswarnedofthepotentialrisksofhumanresourcemanagementinjointstockcomm ercialbankingsectorandaffectedthequalityofbankingactivities.

2.2.6 Realsituationon products and servicesof the Vietnamjointstockcommercial banks

Awarenessonthecomparativeadvantageofservicesdevelopementinoperati onc o m p e t i t i o n , t h u s m a n y b a n k s a r e tryingt o improvep r o d u c t quality a c c o r d i n g tointernationalstandardsbutwithrelevanceintheVietnamesemarket. Incomefromcreditservicesmakesup82.5%andincomefromnon- creditservicesa c c o u n t s 1 4 8 % o f t o t a l b a n k income,i n t h e r e incomef r o m t r a d i t i o n a l s e r v i c e s s u c h ascurrencyexchange,discountingofcommercialbills, preservationofv a l u a b l e s , s a f e r e n t a l , p r o v i d i n g a c c o u n t s e r v i c e s , a s s e t managements e r v i c e s , executor,p o r t f o l i o management,payrollt r u s t , t r u s t issuingstock,b o n d i n t e r e s t payments,dividendpayment.Especiallyinf oreignexchangeservices,issuanceofc r e d i t c a r d s , A T M c a r d s a n d payrolls e r v i c e s m a n y j o i n t s t o c k c o m m e r c i a l b a n k s havesetoutthestrategi capproachandprovidedpackageofalltheservicesfortransactionsofacustomerin steadofprovidingindividualservicesfollowingtheneedsofcustomersasbefore.

Inaddition,jointstockcommercialbanksalsoprovideclientswithsi nglean d uniqueindividualcustomerservices.Apartfromthistraditionaldistributio nchannel,mostc h a n n e l s a r e n e w l y e m e r g i n g w i t h t h e e x p l o s i o n ofinf ormationtechnologysuchasPhoneBanking- bankingservicesviaphone,InternetBanking,MobileBanking A T M networks a lsoa ll ow the use ofinternationalcreditca r d s issuedbythei n t e r n a t i o n a l o r g a n i z a t i o n s s u c h a s V i s a C a r d , M a s t e r C a r d , a n d AmericanExpress inVie tnam.

However,theseservicesarelimitedbecausethelevelofinformationtechnol ogyhasnotyetdevelopedaswellaspersonnellevelhasnotyetmetthel e v el ofco mplexityofnewproducts,andexploitationoftheseservicesandp r o d u ct s effectively.

Withthe structureofexistingproducts and services, joint stockcommercialb a n k i n g sectorinVietnamstilllimitindevelopingnewproduct sandchanginginr e v e n u e structure,alsoproductsqualityislowwhichcannot meetthe increasingdemandofcustomers.Meanwhile,everybankannouncesitsdevel opmentstrategyt o becomea p o w e r f u l f i n a n c i a l g r o u p , a leadingr e t a i l b a n k a s t h e q u a l i t y o f p r o d u c t s andservicesisstillinferiortoforeignbanks- potentialrivalscompetingofthejointstockcommercialbanksinthemarket.

With the rapid advancement of urbanization, industrialization, and information technology, the impact on business management and people's lives has been significant Recently, information technology has become crucial in the banking industry, particularly through the implementation of modern products like Core Banking This system allows banks to manage customer accounts seamlessly across the country, enabling customers to conduct transactions at any branch Additionally, innovations such as phone banking and home banking have emerged, further enhancing customer convenience and accessibility.

Banking,InternetBanking,C a r d S e r v i c e s S o f t w a r e t e c h n o l o g y T 2 4 o f Temenosc a n c a r r y o u t 1 0 0 0 transactions/ second,atthesametimeallows110,000visitorstoaccessandmanage50millionacco untswhichhasbeenapproachedbymanybanks.

However,thesituationoftheapplicationofmoderninformationtechnologyinmana gementofjointstockcommercialbankingsectorhasstilllowerthanthef o r e i g n banking sect or Thewebsite ism a i n l y usedtobroadcast brand andgi ve i n f o r m at i o n onproductandservices,thedataupdateistardy,thedirecttradingonwho lesystemisfacingmanyproblemsduetotransmission linesandconnectinge quipmentofthebranches Thereasonforsuchsituationsisthattheinformationtechno logydevelopment costis relativelylarge,onlyafewlarge bankscandeployapplication.F o r e x a m p l e , S a c o m b a n k h a s i n v e s t e d a b o u t $

B a n k i n g T 2 4 , DongABankhasinvestedsignificantlyinsmarttechnologyAT M Moreover,itt a k e s a long timefrom biddingtouse ofCore- Bankingtechnology,andtherefore,i tisoftenout-of- dateascomparedtothesuppliers.Otherimportantreasonisthattechnicalinfrastructur einVietnamisstillrestricted;t h e s t a b i l i t y ofthetransmissionlineisnothigh.

Thus,informationtechnologyforthebankingsectorisratherlimited,whichaffects productsandservicesdesignstrategyofthebanks,andthecompetitivenesso f Vietnamese bankingsectoringeneralandthejointstockcommercialbanksinparticular int heprocessofcompetingwithforeignbanks.

AdvantagesanddisadvantagesoftheVietnamjoint-stockcommercialbanks 3 7

Networksandtraditionalclients system:homecourt factoraswellas theunderstandingoftheVietnamesepsychologyi s oftenconsideredastheonlycom parativeadvantageofdomesticbanksascomparedwithforeignbanks Highperfor manceofthebankingsystem:

Vietnamban ki ng s y s t e m h a s b e e n r a p i d l y growni n r e c e n t yearsw i t h a n a v e r a g e growthrateof35%/ year.Besidestheachievementofgrowth,operationaleffi cien cy o f t h e commercialb a n k s w a s i n c r e a s e d sharply,e s p e c i a l l y t h e j o i n t s t o c k c o m m e r c i a l b a n k i n g s e c t o r I n 2 0 0 7 , R O A o f t h e e n t i r e s y s t e m r e a c h e d 1.51

%,ROE reached16.42%, while theaverage ratesoftheregionwere1,18%và16,4 7%inturn.

PerformingL o a n r a t e ( N P L ) o f t h e e n t i r e d o m e s t i c b a n k i n g s y s t e m d ec reased from14%in2006to3%in2007.WhencalculatedaccordingtoInternationalFinancialReportingStandards(IFRS),thisratiois30%in2006and6%in2007res pectively Althoughthe NPLratio decreasesdeeply butitis still highnowa scomparedto0.06%ofthebranchesoftheforeignbankinVietnam.

Theprofitabilityofthejointstockcommercialbankingsectorisbetterthan oftheStateownedCommercialbankingonebecause ofitshigherinterestra tes.Th e averageROAandROEofthejointstockcommercialbankingsectorin200 7reached respectively1.9%and18.4%.Inthissector,ACB,STBandTechcombankdomin atedontheprofitability.

MB 13.529 27.777 44.346 69.008 109.623 137.798 VIB 16.527 39.305 34.719 56.639 93.827 96.950 TCB 17.326 39.542 59.390 92.534 150.291 180.531 EIB 18.327 33.71 48.248 65.448 131.111 183.567 STB 24.776 64.573 68.439 104.019 152.387 141.469 ACB 44.645 85.392 105.306 167.881 205.103 281.019

Source:S t a t e Bank ofVietnam,fpts.com.vn,cafef.vn

Source:S t a t e Bank of Vietnam,fpts.com.vn,cafef.vn

Source:StateBankofVietnam,fpts.com.vn,cafef.vn

Source:S t a t e Bank of Vietnam,fpts.com.vn,cafef.vn

Source:S t a t e Bankof Vietnam,fpts.com.vn,cafef.vn

Source:S t a t e Bankof Vietnam,fpts.com.vn,cafef.vn Favorablelegalenvironment:

Thebranchesofforeignbanksisrestrictedfromexpandingoperationscale,mo bilizationofpopulationsavings, inordertocreatefavorableconditionsfordomesticban kstodeveloprapidlyandincreasetheircompetitivenessbeforetherestrictiontermsareab olished.AtthesametimetheStatebankalsoissuednewDecisiononEstablishmentandO perationRegulationsforthejointstockbankstowardsmorestringent,higherrequirement soncapitalof organizationscontributingfunds,holdingperiodofthefoundingshareholders, inordert olimittothenumberofnewbankssettinguptoensurestabilityforthebankingsystem.Mo reover,theprovisionsforestablishmentofbankswith100%foreigncapitalarealsomores trictontheconditionsoftheproperty,operationdurationofthemotherbank Thisisthesu pportoftheGovernmenttoprotectdomesticbanksinthefaceofthe increasinglyfiercecompetitionofthefinancial-bankingmarket.

Basedontheincome str uc tu re ofbanks,itcanbeseenthattheincome frominterestaccountingf o r atleast75%ofthetotalincomeofthebanks,its h o w s that commercial banks ingeneralandthejointstock commercialbanks inp a r t i c u l a r commercialbanksmostlyprovidetraditionalandsimpleservices andp r o d u c t s suchastakingdepositsandlending.Whileothercomplicatedprod uctssuch a s a s s e t m a n a g e m e n t , p o r t f o l i o management,d e r i v a t i v e p r o d u c t s , c a r d services havenotyetpaidproperattentionandstronglyinvestedb ythebanks.

AccordingtostatisticsfromtheEconomistIntelligenceUnit,onaverage,ag l o b a l multi- businessb a n k providescustomerswithmorethan2 millionp r o d u ct s While in Vietnam,the statistics showsthatthe Vietnamcommercial bankingsyste mprovidescustomerswitharound100products.

Theb a n k i n g s y s t e m c u r r e n t l y has3 0 b a n k s deployingi s s u e c a r d s w i t h a b o u t 1 3 0 d i f f e r e n t cardb r a n d s , amongthem,5 4 % isdomesticc a r d b r a n d Bankshavenotstoppedinvestingintechnologyinfrastructureforcardoperatio n.AsofNovember2007,therewere4.280ATMs,22.959P O S , thecardalliancei ncluded:TheSmartlinkcompanyhad25memberswith2,056ATMscounting48

Recently,BanknetvnandSmartlinks i g n e d t h e associationagreementf o r t r a n s a c t i o n o n A T M o f e a c h o t h e r b e t w e e n t h e s e t w o s y s t e m s.H o w e v e r ,t h e c o n n e c t i o n w a s s t i l l l i m i t e d a n d i n f l e x i b l e M e a n w h i l e b a n k s r a c e a g a i n s t e a c h othertofindATMlocations.Thefactisthattherear enearly10ATMsofd i f f e r e n t b a n k s a t t h e s a m e p l a c e , i t s h o w s t h a t d o m e s t i c b a n k s a r e i n v e s t i n g r e s o u r c e s i n a wastew a y b u t d o n o t f o c u s o n l i n k i n g t o g e t h e r t o r e d u c e t h e i n v e s t m e n t costswhichleadstor edundancy.

Currently,c o m m e r c i a l ba n k s ha ve notyetfullyevaluatedanddefin edr i s k s onthestrictscientificbasis.Themodernmodelsandtoolsforrisksmeasure a n d m a n a g e m e n t h a v e n o t b e e n w i d e l y a p p l i e d (Asset- liabilitym a n a g e m e n t,bankmanagementaccordingtotheprinciplesofCAMEL )Someb a n k s arejustbeginningtoapplyinternationalstandardsatlowlevel.

The rateofloans/totalassetsatthe averagelevelofabove50%reflectst h at commercialbanksareheavilydependentoncredit activities.

Source:Report of thebankingsectorof theBaoVietSecuritiesCompany

Sinceearly2008,credit activities cop ed witha highr i s k w he n there ale st a t e marketandthesecuritiesmarketdroppedsharplysincelendingactiviti eso f banksmainlyreliedoncollateralasrealestate.Moreover,attheendof2007t hejointstockcommercialbanksdevelopedproductsofhomeloanswithm a t u r i t y from10to25years.Whiletherealdemandforhouseswasnotreallyhigh,itwasm ainlyduetospeculativeactivitieswaitingthepriceuptobenefitf r o m differences

Whentherealestatemarketdeclined,speculatorscouldnotselltheirrealest a te topaybankdebtswhenthedueforprincipalandinterestpaymentfelt,andt h en theywou ldfallintothesituationofborrowingtemporarilyintheunofficial marketwithveryhighinteresttopaytothebankandwaitingfortherealestatemarket recoveringtosellthemortgagepropertytopaytheirdebt.Whenthereale s t a t e mark etdecreaseddeeperandwasatriskoffreezing,thebankloanwasatr i sk ofbaddebt andlosingtheability ofliquidation Meanwhile, accordingtothestatistics oftheStatebank,a t t h e e n d of2 0 0 7 , v a l u e o f c o l l a t e r a l i n r e a l estatecounte dfor50%thevalueoftheassetsofwholebankingsystem,o u t st a n d in g l o a n s f o r r e a l e s t a t e w a s a r o u n d 1 3 5 , 0 0 0 b i l l i o n d o n g , countinga b o u t 1 0.8%oftotalloansofthesystem.

5 0 % o f o u t s t a n d i n g loans.Tolimittherisktothebankingsystem,theStatebanki ssuedDirective0 3 i n 2 0 0 7 t h e n t h e D e c i s i o n 0 3 i n t h e 2 0 0 8 o n c o n t r o l t h e s t o c k s mortgagel o a n s n o t t o e x c e e d 2 0 % o f c h a r t e r c a p i t a l o f t h e b a n k s W h e n t h e securitiesmarketdeclinedc o n s e c u t i v e l y during t h e 2 0 1 1 , t h e m a r k e t v a l u e o f mortgagestockswaslowerthanthepricethatbankappliedforthei rloans,atthist i m e , t h e b a n k h a d t o s e l l t h e mortgages t o c k s t o t a k e b a c k t h e i r f u n d s T h i s madethesecuritiesmarketdroppedmoreseverely,andtheban k'slossesincreasedmore.

Source:Report ofthebankingsectorof theBaoViet SecuritiesCompany

Vietnam’scommitmentswhenjoining WTO

(a) Foreigncreditinstitutionsare onlypermittedtoestablishcommercialp r es en c e inVietNaminthefollowingforms:

(i) Withrespecttoforeigncommercialbanks:representativeoffices,branchesofforei gncommercialbanks,jointventurecommercialbanks,inwhichtheforeignparty'sc a p i t a l c o n t r i b u t i o n mustn o t e x c e e d 5 0 % o f t h e c h a r t e r c a p i t a l o f t h e joint - ventureb a n k s , j o i n t v e n t u r e f i n a n c i a l l e a s i n g c o m p a n i e s , 1 0 0

% f o r e i g n o w n e d financialleasingcompanies.Since1stApril2007,jointventur efinancialleasingcompaniesa n d 1 0 0 % f o r e i g n o w n e d f i n a n c i a l l e a s i n g companiesa r e a l l o w e d toestablish100%foreignownedbank.

(ii) Withrespecttoforeignfinancialcompanies:representativeoffices,jointventurefinance company,100%foreignownedfinancialcompanies,jointventurefinancialleasingcompan iesand100%foreignownedfinancialleasingcompanies

(iii) Withrespecttoforeignownedfinancialleasingcompanies:represent ativeoffices,j o i n t v e n t u r e financiall e a s i n g c o m p a n i e s a n d 1 0

(b) Withinfiveyearsofaccession,Vietnammaylimittherightofaforeignbankb r a n c h toacceptdepositsinVietnamesedongfromVietnamesenaturalpersonsw i t h whi chthebankdoesnothaveacreditrelationshiptoaratioofthebranch'spaid- incapitalaccordingtotheschedulebelow:

(i) VietNamm a y l i m i t e q u i t y p a r t i c i p a t i o n byf o r e i g n c r e d i t i n s t i t u t i o n s ine q u i t i z ed Vietnamesestate- ownedbankstothesamelevelasequityparticipationbyVietnamesebanks.

(ii) Forcapitalcontributionintheformofbuyingshares,thetotalequityheldbyforeign ins ti tu ti on sa nd in di vi du als ine ach Vie t Nam'sj oi nt - sto ck c o m m e r c i a l b an k m a y n o t e x c e e d 3 0 % o f t h e b a n k ' s c h a r t e r e d c a p i t a l , u n l e s s o t h e r w i s e providedbyVietNam'slawsorauthorizedb yaVietNam'scompetentauthority.

(d) Ab ra nch o f foreigncommercialban ki s n o t a ll owe d t o o pen o t h e r transact ionpointsoutsideitsbranchoffice.

(a) Thec o n d i t i o n s f o r t h e e s t a b l i s h m e n t o f a b r a n c h o f a f o r e i g n c o m m e r c i a l b an k inVietNam:TheparentbankhastotalassetsofmorethanUS$20bill ionattheendoftheyearpriortoapplication.

(c) Thec o n d i t i o n s f o r t h e e s t a b l i s h m e n t o f a 1 0 0 % f o r e i g n - i n v e s t e d f i n a n c e c o m p a n y orajointventurefinancecompany,a100%foreig n-investedfinancialleasingcompanyorajoint- venturefinancialleasingcompany:Theforeigncreditinstitution hastotalassetsofmorethanUS$10billionattheendoftheyearpriortoapplication.

SecuritiesMarketandtheattractivenessofbankingshares

According to Decree 141/2006/ND-CP 22 November 2006 theGovernmentpromulgatedthelistoflevelsoflegalcapitalofcreditinstitutions

Thus,basedonthisregulation,somesmallandmediumsizedjointstockcom mercialb a n k s h a v e t o r a i s e c a p i t a l from2 0 0 8 -

2 0 1 0 toe n s u r e s u f f i c i e n t l e g a l capitalasrequired.Whilethesecurities marketsare fallinginto asevered e g r a d a t i o n cycleduetotheeffectbymacr oeconomicfactors,theglobal economics i t u a t i o n , t h e Vietnamesee c o n o m y , supplya n d demandf a c t o r s ofsharesonthemarketandpsychologicalfactors.

Establisheda n d o p e r a t i n g s i n c e July2 0 0 0 , V i e t n a m ' s s e c u r i t i e s m a r k e t h a s s e t u p a s t o r y a b o u t t h e miracleg r o w t h o f Asia,b r i n g s b e n e f i t s t o t h e economy:establishinganimportantchannelofcapitalwithatotal marketc a p i t a l i z a t i o n v a l u e i n c r e a s i n g everyyear,3 5 % o f G D P in2 0 0 7 S h a r e h o l d e r socializationtrendtakesplacebroadlyincreasingly,manybusiness eswithonlyf a m i l y factorintheirownershipstructurepreviouslyhasbecomepublicly- ownedcompaniess u c h asS S I , STB, S o m e o t h e r b i g b u s i n e s s e s s u c h a s

P h u MyF e r t i l i s e r , B a o V i e t , P V I , S u d i c o , P V D , F P T , V i e t c o m b a n k , w h i c h w e r e s t i l l the1 0 0 % S t a t e o w n e d e n t e r p r i s e s a f e w yearsa g o n o w b e c o m e isp u b l i c l y - o wn ed companieswiththousandsofshareholders.

Year VNIndex Tradingvolume(sharesandf u n d Certificate)

Source:Summationof VietnameseSecuritiesMarketin 2007-Kim LongSecurities

In 2007, the Vietnamese Securities Market achieved remarkable success in capital raising and stock issuance, solidifying its role as a crucial capital channel for the economy According to the State Securities Commission of Vietnam, the market mobilized 90 trillion VND for businesses that year, marking a significant milestone This year is particularly notable for the first share auctions of major banking financial enterprises in Vietnam, with record numbers of shares offered for sale, showcasing the market's growth and potential.

Insurance Group,O il andGasFinancial company,BankforForeignTradeofVie tnam.

Government advocates are promoting the equitization process of state enterprises in Vietnam, particularly focusing on the equitization plans of institutions like the Housing Development Bank of the Mekong Delta, Vietnam Joint Stock Commercial Bank for Industry and Trade, Bank for Investment and Development of Vietnam, Mobifone, Vietnam Electricity, and Vietnam Airlines This push has highlighted the surplus supply situation in the Vietnamese securities market The market experienced significant shock when Vietcombank sold its shares for the first time, leading to tighter controls on public offering licenses Consequently, the equitization timeline for state enterprises was postponed The State Bank and the State Securities Commission of Vietnam collaborated to review applications for further share sales in the commercial joint-stock banking sector; however, these measures were insufficient to mitigate the decline of the Vietnamese stock market from late 2007 to June 2008.

DuringthefevertimeoftheSecuritiesMarket,bankshareswerehighlya p p r e c i at e d byin ves to rs B a n k i n g s h a r e s w e r e alwaysh u n t e d t o buya l o t byinvestorsandpaidmorespecialfavorthanotherpotentialsharesinthemarket.T h e impressivebusinessresultsofbanksin2006,2007causedthepriceofbanksharesco ntinuouslytoholdhighpositionsamongthemostvaluedcommoditiesinthe stockmarket.Apart fromattractiveness ofbusinessactivitieswhich banksw e r e continuouslygrowingwithimpressiveprofitability,thefactthattheforeignst rategicinvestorspurchasingsharesofbankswasalsoafactorthatmadeupthea t t r a c t i v e n e s s ofbankshares.OntheOTCmarket,stockpricesofnewlyestablishedbank ssuchasABBank,SHB,G-

In early 2007, several prominent banks, including VP Bank, VIB Bank, Southern Bank, and Habubank, experienced significant increases in their stock prices due to a booming securities market For instance, ACB shares soared to 290,000 VND each, STB reached over 180,000 VND, and MB shares climbed to more than 13.3 million VND, with a par value of 1 million Similarly, Eximbank's shares exceeded 18 million VND During this period, many banks issued shares and convertible bonds at values significantly higher than their par value, attracting eager investors and resulting in a substantial surplus in the market.

Following the State Bank's Directive 03, which restricted banks from lending securities investments to more than 3% of total outstanding loans, funding sources into the stock market were halted This led to a significant decline in trading activity, forcing banks to sell stocks to maintain liquidity Except for ACB and STB, shares of joint-stock commercial banks experienced a substantial drop in the unofficial market, nearly freezing trading Additionally, banks' frequent announcements about capital raising plans increased the supply of shares amidst low liquidity, diminishing the attractiveness of this share group Furthermore, both domestic and international financial markets were fraught with potential risks, and changes in macroeconomic policies significantly impacted bank operations.

In 2008, the U.S and global financial crises negatively impacted the Vietnamese Securities Market, prompting the State Bank to tighten monetary policies to control inflation, raising concerns about bank operations Joint-stock commercial banks simultaneously reported profits lower than expected, leading to heightened investor fear in the stock market This pessimism caused stock prices in the banking industry to plummet, with shares of ACB and STB losing 50% of their value within the first six months of the year In the free market, some banks like ABBank saw their shares fall below par value, while VCB dropped to 30,000 VND per share Despite this downturn, shares of Eximbank, VPBank, Techcombank, and Military Bank maintained some liquidity, while other joint-stock commercial banks struggled to trade.

T h e legalenvironmentaffectingthebusinessmergersandacquisitionsactivitiesinV ietnam

In 2005, the Investment Law classified business mergers and acquisitions as a form of direct investment It defines direct investment as capital investment where investors actively participate in managing investment activities Article 25 of the law grants investors the right to merge or acquire companies and branches, stipulating that such transactions must adhere to the provisions of this law, competition law, and other relevant legal requirements.

EnterpriseL a w 2 0 0 5 , A r t i c l e 1 5 2 , 1 5 3 s t i p u l a t e s t h a t : " T w o o r morecompaniesofthesametype(hereinafterreferredtoasconsolidatingcompani es)c a n beconsolidatedintoanewcompany

(hereinafterreferredtoasconsolidatedcompany)bywaysoftransferringallasset s,rights,liabilitiesandinterestsintotheconsolidatedcompanyandtheconsolidati ngcompanywillceasetoexist."

“Oneo r morec o m p a n i e s o f t h e samet y p e ( h e r e i n a f t e r r e f e r r e d t o a s themergingcompanies)canbemergedintoanotherexistingcompany(herein afterr e f e r r e d toasthemergedcompany)bymeansoftransferringallassets,r ights,liabilitiesa n d interestsintothemergedc o m p a n y andt h e mergingcompanie sw i l l ceasetoexist”

Consolidationofenterprisesmeanst h e transferbytwoormoreenterprisesofall oftheir lawfulassets, rights,obligations andinterests to forma newbusiness,andatthesametimetheterminateoftheexistenceofthecon so lidi ng enterprise.

Undert h e p r o v i s i o n s o f t h e s e A r t i c l e s , t h e a c t i v i t i e s o f merger,con so lid at io n , andacquisitionrefertoactsofeconomicconcentration, theeconomicconcentrationenterpriseswithcombinedmarketsharesfrom3 0%to5 0 % ontherelevantmarketmustnotifythecompetitionmanagingbodybef orecarryingouteconomicconcentration.Economicconcentrationisforbiddenifthecom binedmarketsharesofenterprisesparticipatingineconomicconcentration ar e over50%oftherelevantmarket.

For activitiesofpurchase ofsharesbyforeigninvestors,itisstipulatedinD eci sion N o 36/2003/QD- TTg 11issuedon 1 1 March 2 0 0 3 o n promulgating r eg u l ati o n s oncapitalco ntributionandpurchaseofsharesbyforeigninvestorsinVietnamesee n t e r p r i s e s I n t h i s D e c i s i o n , i t i s s t i p u l a t e d t h a t t h e maximump e r c e n t a g e ofsharesownedbyforeig ninvestorsinVietnamenterprisesis30%o f c h a r t e r c a p i t a l o f enterprisesi n

T T g stipulatedthatforeignorganizationsandindividualspurchasingandsellingsec uritiesonthesecuritiesmarketofVietnammayholdamaximumof49%oft h e t o t a l ofshareslistedor registeredfortradingbyanyorganizationswhichhasbeenlistedorhasregisteredfortradi nginaSecuritiestradingcenters.

According to Decree 69/ND-CP, foreign investors purchasing shares in Vietnamese commercial banks are now limited to a maximum shareholding of 15% of the charter capital for strategic investors and their affiliates, down from the previously expected 20% Additionally, the decree specifies that the overall maximum shareholding percentage for all foreign investors, including existing foreign shareholders and their affiliates, is set at 30% of a Vietnamese bank's charter capital.

Vietnamesebankthatwishestosellitssharestoforeigninvestorsmusthavethem i n i m u m chartercapitalof1.000b il li o n VND.Aforeigncreditinstitutionthat wi sh e s topurchasesharesofaVietnamesebankmusthavetheminimumtotal" Credit" assetsofUSD20billionintheyearprecedingtheyearofregistrationofsh ar epur chase.Foreignstrategicinvestorsandtheiraffiliatedpersonsmayonlyassignshar esundertheirownershiptootherorganizationsorindividuals(bothathomeandabroad) atleastfiveyearsaftertheybecomeforeignstrategicshareholdersofaVietnamese bank.

Also underthe draft onRegulation on contributionofcapital, purchase ofsh ares offoreigninvestors,itisalsomentioned:foreignorganizationsorind ividualscanpurchaseamaximumof30%ofthesharesofthepubliccompanies,49% of thesharesof listedcompanies.Tradingand mergeractivitieso f e n t e r p r i s e s s h a l l n o t be r e g u l a t e d o f t h i s r e g u la t i o n

T h u s , o b v i o u s l y , businesspurchaseandmergeractivitieswillbecontrolledwithot herregulationsthatVietnameseGovernmenthasnotyetissued.Thiswillmaketheb usinesspurchaseandmergeractivitiesdifficulttoorientandquantifythetimeo f eachbusiness.

Bank mergersand acquisitionsinVietnam

In 1993, Southern Bank, with a charter capital of 10 billion VND, successfully mobilized 31.6 billion VND, resulting in 21.6 billion VND in outstanding loans and generating a profit of 259 million VND Following the Asian financial crisis in 1997, Dong Thap Joint Stock Commercial Bank, despite its effective operations, was merged into Southern Bank due to charter capital requirements, which led Southern Bank to increase its charter capital to 100 billion VND By 1999, Dai Nam Commercial Joint Stock Bank was also merged into Southern Bank, allowing it to utilize compulsory reserves in bonds and treasury bills for a maximum of three years, helping to offset the losses incurred from the merger with Dai Nam.

N a m commercialjointstockbankbeforethemerger.In2001,ChauPhucommer cialj o i n t st o c k bankwasallowedbytheStatebanktobemergedintoSouthernbank.I n 2002,So uthernbankboughtDinhCongPeople'screditfunds-Thanh Tri- HaNoi.In2003,TheRuralJoint-StockCommercialBankCaiSan-

Alsof r o m t he p o s t - f i n a n c i a l c r i s i s o f 1 9 9 7 , M e k o n g B a n k w a s mergedintoVietHoaBank,atth esametime,VietHoaBankincreaseditscapitalfrom

In1999,DongaCommercialJointStockBankboughtLongXuyenQuadr angleCommercialJointStockBank,increasingcapitalandexpandingtheo per at i on areatotheMekongDelta.In2003,TanHiepCommercialJointStockBank was mergedintoDongaCommercialJointStockBank,raisingthecharterc a p i t a l to253 billion.

In2 0 0 3 , Q u e D o C o m m e r c i a l J o i n t S t o c k B a n k w a s t a k e n o v e r a n d r estr u ctu r ed byt h e n e w s h a r e h o l d e r s a f t e r a l o n g p e r i o d o f b e i n g k e p t u n d e r surveillanceoftheStatebankunderaspecialregime,thenitr enamedtoSaigonCommercialBank(SCB)astoday.

Inr e c e n t t i m e s , i t i s w i d e s p r e a d t h a t t h e f o r e i g n b a n k s p a r t i c i p a t e i n t o Vietnam’sfinancialbanksintheformofstrategicpartnership.Therea remanyr e a s o n s t h a t t h e l a r g e f o r e i g n f i n a n c i a l institutionsm o s t l y c h o o s e t h e p a t h o f becominga s t r a t e g i c p a r t n e r o f t h e domesticj o i n t s t o c k c o m m e r c i a l b a n k s t o p en et r a t e Vietnam'sfinancialmarket,butmainonesare:

Firstly,although V i e t n a m has a route fo ro pe ni ng of f i n a n c i a l ser v ices w h e n joiningWTO,butnowthedoorisstilllimited.Theestablishmentofjoin tv e n t u r e banks,100%foreignownedbanksalsofacesmanydifficultiesonlegal procedures,r e g u l a t i o n s o n t h e m i n i m u m c h a r t e r c a p i t a l , a s s e t s a n d f i n a n c i a l r e so u r c e s demonstration

Secondly,e v e n a f t e r t h e e s t a b l i s h m e n t o f branches of100%f o r e i g n cap i t al b a n k s , a l t h o u g h c o n s i d e r e d a s t h e p r o f e s s i o n a l organizationsw i t h ex p e r i e n c e inmanagement ,butthesebankshasnot yetunderstoodthelocalmarket,c o n s u m i n g h a b i t s s o theya r e h a r d tor e a c h c u s t o m e r s , e s p e c i a l l y f o r individualcustomers.Moreover,theexpansionofbr anchnetworkisnoteasytoq u i c k l y gainmarketsharewhichisthestrengthofthelocalba nks.

Thechoiceofbeingpartnerofalargejointstockcommercialbankis astrategicchoicefortheplantoenterthefinancialmarketofVietnam.Themainp u r p o s e oftheforeignbanksandfinancialinstitutionsistotakeadvantageofthebranch n e t w o r k a n d e x t e n s i v e c u s t o m e r n e t w o r k o f d o m e s t i c j o i n t s t o c k commerci albanks,thankstothat,theyaccess,learnandatthesametimehasac h a n c e t o ma kec u s t o m e r s f a m i l i a r w i t h t h e i r p r o d u c t s , c a p t u r e g r a d u a l l y this p o t en t i al marketbeforefullypenetrating.However,with theirfinancialstrength,p r o f e s s i o n a l i s m a n d modernity,itdoesnotexcludethep ossibilityo f largef o r e i g n f i n a n c i a l institutionswanttocarry outmergersandacquisitionsofVietnamesejointstockcommercialbanksandthismight bethefirststeps.

In2005,HSBC(thelargestbankofEurope)andANZ(thethirdlarges tbankprovidingcreditinAustralia)spent17.3millionUSdollarsand27millionUS dollarsrespectivelytobuy10%ofsharesatTechcombankandSacombank.

However,itdoesnotmeanthatANZcannotincreasethecapitalcon t r ib u ti o nbecausewhenSacombankissuesmoresharestoincreaseitschartercapital,A

On16July2008,theStateBankGovernorapprovedSeABanktosellíts h a r e s t o f o r e i g n s t r a t e g i c i n v e s t o r b a n k S o c i e t e G e n e r a l e S A w i t h t h e m ax i m u m percentageof15%ofchartercapitalofSeaBank.

( t h e t h i r d largestfinancialgroupinSingapore),toincreasethepercentageowners hipof sharesofOCBCatVPBankreachingthelevelof15%ofchartercapital.

Eximbankh a s c o m p l e t e d t h e s a l e o f s h a r e s t o f o r e i g n s t r a t e g i c shareholders:fourforeigninvestorsbought25%shareso fEximbankincludingS u m i t o m o M i t s u i B a n k i n g C o r p o r a t i o n ( S M B

C ) a n d i t s a f f i l i a t e d p e r s o n p urch asing 1 5 % o f c h a r t e r c a p i t a l o f E x i m b a n k ; t h e i n v e s t m e n t f u n d s VOFIn vestmen t Limitedmanagedb yV i n a C a p i t a l purchasing5%;MiraeAssetE x i m InvestmentLimited bel onging toMiraeAsset group (Korea) p u r c ha s i n g 4.5%; M i r a e A s s e t M a p s O p p o r t u n i t y V i e t n a m EquityBa l a n ce d F u n d 1 ( O V E B F ) buying0.5

2 0 0 8 , a l t h o u g h V i e t n a m e s e S e c u r i t i e s M a r k e t d ecl in ed seri ously,butMalayanBankingBerhadsevere(MayBank)stillcarriedo u t buyingback of15%ofchartercapitalofABBANKwiththelowerprice4.5t i me s o f t h e f a c e v a l u e M a y B a n k w o u l d l i k e t o o w n 5 % s h a r e s morea f t e r a l l o w ed b ytheVietnamlaw,toincreasethepercentage ofstockownershipto

ForeignbanksintheUnitedStateshasformallysignedam e m o r a n d u m ofunder standingofbuyingback10%sharesofSouthernBanktobecomea strategici n v e s t o r o f t h i s J o i n t S t o c k B a n k BNPP a r i b a s , c u r r e n t l y h o l d s 10%sharesin OrientCommercialJointStockBank,BNPParibasdesirestoincreasethepercenta geofholdingsh a r e s by20%.On22thFebruary 2008,O r i e n t CommercialJoi ntStockBankheldaceremonyt o handoversharec e r t i f i c a t e toBNPParibasBan k(France)inHochiminhCity.Thissaleof10%ch a r t e r capitaloftheOrientCo mmercialJointStockBanktoBNPParibaswasapprovedbytheGovernorofSta teBankofVietnam.OCBissued11,111,100sharesmoreequivalentto111.111 billiondongatparvaluetosellBNPParibas.

Standard Chartered Bank has increased its stake in Asia Commercial Bank (ACB) by acquiring 6.16% of shares and 7.10% of convertible bonds, raising its charter capital in ACB to 15% and 15.86%, respectively Since becoming a strategic shareholder and partner in July 2005, this move demonstrates Standard Chartered's long-term investment ambitions in Vietnam, particularly following the recent approval for establishing a wholly foreign-owned subsidiary bank in the country.

Alongwitht h e f o r e i g n b a n k s , t h e d o m e s t i c b a n k s a l s o c o n d u c t e d buyingb a c k s h a r e s ino r d e r t o l a y t h e g r o u n d w o r k f o r t h e M e r g e r a n d a cq u i si ti o n ofthepotentialbanks.

On1 8thSeptember, i n H o c h i m i n h city,w i t h t h e p r e s e n c e o f r ep resen ta ti ves fromtheHochiminhcitybranchoftheStateBankofVietnam,theGiaDinh

CommercialJointStockBankandVietcombanksignedastrategicinvestmenta n d p a r t n e r s h i p a g r e e m e n t.A c c o r d i n g l y ,VCBbecamea strategic partnero f G i a D i n h Bankw i t h t h e i n v e s t m e n t a n d h o l d i n g p e r c e n t a g e o f

3 0 % sharesofGiaDinhbank(about150billiondong).Thereby,theVCBbecameth eonlyd o m e s t i c s t r a t e g i c s h a r e h o l d e r o f G i a D i n h b a n k U n d e r t h e st rategicinvestmentandpartnershipagreementwiththeGiaDinhbank,VCB,alo ngwiththeV i e t c o m b a n k S e c u r i t i e s I n v e s t m e n t F u n d M a n a g e m e n t J o i n t V e n t u r e Company (VCBF-

SubsidiaryofV C B ) , c o n t r i b u t e d capital toinvest inGi a D in h b an k , which

KienlongBanknowhas twostrategicshareholdersAsiacommercialbanks(ACB)andSaigonTourist,e achowns10%ofitsshares,apartfromthenumberofadditionalsharestheyca npurchaseastheirproportions,botho r g a n i z a t i o n s a r e w i l l i n g t o buym o r e w h e n t h e K i e n L o n g B a n k i n c r e a s e s t h e capital.

DaiA C o m m e r c i a l J o i n t S t o c k B a n k i n v i t e d l a r g e r i n v e s t o r s t o b e i t s strategicand potentialshareholderssuchasAsiaCommercialbank, D2DCompany,D o n gN a i R u b b e r Company,T r u on gHaiAutomobileC o m p a n y b e s i d e twostrategicshareholdersbeforetheBankfo rI nv es tm en t &Devel opmento f V i e t n a mandTinNghiaCompany.

On2 2 t h O c t o b e r 2 0 0 7 , V i e t c o m b a n k a n d MBs i g n e d a s t r a t e g i c cooperationagr ee men t Thereby,Vietcombank w i l l increasethepercent ageofo w n e r s h i p s h a r e t o a m i n i m u m o f 1 0 % c h a r t e r c a p i t a l a t MBa s a s t r a t e g i c shareholder.

Thec u r r e n t s i t u a t i o n o f buyingb a c k sharesa t V i e t n a me s e C o m m e r c i a l JointStockBanksinrecentyearsshowsthattheforeignbanksandthedomesticVi etnameseCommercialJointStockBankshavetheirownpurpose.Thesebanksn o t o nlyservesasstrategicinvestmentsbutalsowanttocreatetheircontrolrightsinthetargetJSCBs,startingwithbuyingacertainpercentageofsharesthencarryingo u tstrategiestoacq uisitewhentherearefavorableconditions.Therefore,bank mergersa n d a c q u i s i t i o n s i s b e i n g t a k e n p l a c e g r a d u a l l y a s I n e v i t a b

Inevitability,objectivenessandconformabilitywithinternationaleconomicd e v e l o

Accordingtotheranking oft he InternationalMonetary Fund,GDPp ercapitaof

Vietnam ranks 123rd out of 180 countries, with a low income and a population exceeding 84 million The country's GDP is approximately $65 billion, supported by a banking sector comprising 36 commercial joint-stock banks, five state-owned banks, 37 foreign bank branches, five joint venture banks, and one social policy bank Despite the large number of banks, few are strong, leading to intense competition characterized by aggressive deposit interest rates and efforts to attract business customers for credit However, there is a lack of investment in utility products, and the rapid expansion of banks has resulted in inadequate personnel management, causing difficulties in keeping pace with growth This has led to increased risks within the banking system, including credit risks and the emergence of weak banks burdened by high bad debt and low efficiency The profitability of banks sharply declined in the last half of 2008 due to inflation, tightened monetary policies, and an economic downturn Businesses struggled to raise capital for production, leading to increased costs and reduced output, ultimately diminishing business efficiency and the ability to meet loan obligations, particularly as many real estate loans matured at year-end, resulting in a rise in bad loans.

In 2008, commercial banks aimed to enhance their financial capabilities by increasing charter capital; however, adverse events in the securities market led to a decline in bank stock values, with many shares falling below face value The State Securities Commission's strict regulations on public stock offerings made it challenging for Commercial Joint Stock Banks to raise capital Consequently, these banks opted to increase their charter capital through methods such as dividing share capital surplus, issuing dividends in shares, and selling stakes to foreign strategic partners Some banks sold up to 20% of their charter capital to foreign banks, hoping for assistance in management, technology, and training, though the expected support has not materialized By 2010, with the financial market in Vietnam fully opening to foreign banks, these institutions aimed to introduce their products in Vietnam, eventually seeking control over local banks This strategy of becoming strategic partners is seen as a more effective alternative to establishing joint-venture banks or fully foreign-owned banks Concurrently, Vietnamese Commercial Joint Stock Banks, like SeaBank, are also pursuing foreign banks as strategic partners, exemplified by SeaBank's proposal to sell 15% of its shares to Société Générale of France.

Therefore,insteadofintensifyingoflookingforstrategicpartnershipasf o r e i g n b a n k s , intensifyingofmarkete x p a n s i o n throught h e e s t a b l i s h m e n t o f b r a n c h e s andtransactionbureauswhichspendsalotoftimeandcosttoachievethe irgoals,VietnameseCommercialJointStockBanksshouldresearchandseektochooset argetbanks forMerger andacquisitionto create astrongandlargeb a n k w i t h enoughfinancialcapacityand sizetobecomea strongfinancialgroupt o competewithforeignbanks.

Bankm e r g e r a n d a c q u i s i t i o n i s t h e l a r g e t e n d e n c y o f t h e b a n k i n g a n d financiali n d u s t r y int h e w o r l d g o i n g a b r e a s t w i t h t h e p r o c e s s o f i n t e r n a t i o n a l economicintegration.F o r t h e i m p a c t o f globalization process,its h o u l d b e mentionedthesuccessofChinesebanksduringtheint egrationandconfirmingtheircompetitivenessprocessbywayofbankmergers and.InearlyJune2008,C h i n a M e r c h a n t s B a n k -

S h e n z h e n , C h i n a s p e n t 4 7 b i l l i o n USd o l l a r nearlythreetimeslargert hant h e b oo k valueofWingLung Ban k o f H o n g Kong, to acq u ir e t hi sba nk C h i na Me rch an ts o v e r t o o k twor i v a l s in th e r a c e to a c q u i r e WingLungBa nk,whichwereIndustrialandtheIndustrial&CommercialBanko fChinaandANZB ankofAustraliaandNewZealand.

AnothertypicalexampleinAsiawasthemergerbetweenUFJBankandMi tsubishiTokyotolaunchMUFG,theworld'slargestbank,itwassaidtomakea n effecttost opthebankingcrisisintheyear2005inJapan.Infact, atthattimethef i n a n c i a l s y s t e m ofJ a p a n o p e r a t e d p l o d d i n g l y , b e c a u s e w h i l e b a n k s w e r e stills u f f e r i n g f r o m b a d l o a n s accumulatively,d e m a n d f o r n e w l o a n s r e d u c e d s i g n i f i c a n t l y sincethesecuritiesmarketandbu bblerealestatemarketcollapsedint h e e a r l y o f 1 9 9 0 s T h e t o t a l b a d l o a n s o f TokyoM i t s u b i s h i -

UFJ was estimated at 5,300 billion yen, while Sumitomo Mitsui and Mizuho were valued at 3,300 billion yen and 3,200 billion yen, respectively Despite advancements in business activities, many Japanese banks showed little interest in transactions with U.S and European banks The takeover of UFJ by Mitsubishi Tokyo Bank, regarded as Japan's most powerful bank, is seen as a positive move to enhance the domestic financial system Analysts believe this merger will lower the risk of UFJ's bankruptcy and restore public confidence Following the announcement of the merger prospects, UFJ shares surged by 11% to 522,000 yen per share, while Mitsubishi's shares rose by 7.4% to 1.03 million yen per share According to economic experts from ING Securities in Tokyo, this merger could yield greater benefits than previous ones.

In 2003, UFJ faced significant losses of approximately $3.7 billion and struggled to meet government targets to reduce its bad loans, which totaled $34.5 billion by March 2005 The acquisition of UFJ by Mitsubishi Tokyo, Japan's most powerful bank, aimed to expand its customer base to include individuals and small to medium enterprises, complementing its existing relationships with large corporations, particularly subsidiaries of Mitsubishi Corporation This strategic merger was expected to enhance Mitsubishi's revenue diversification and strengthen its competitive position in the banking sector Following this merger, Japan's major banks decreased from 21 to just seven, potentially triggering a wave of consolidations among smaller, weaker banks in the country.

BankmergerandacquisitionactivitiesinMalaysiatookplacealsoveryactivelyinth epasttime,typicallysuchasthedealofECMLibraBhdandAvenueCapitalResourcesBhd. ECMLibraBhdsolditsECMLibraSecurities,consultantinvestmentbranchECMLibraC apitalandfundmanagementbranchECMLibraCapitaltoitsopponent,Avenuewith293mi llionringgit(75millionUSdollar).ThisamountwaspaidbyAvenuebyissuingnewshares. Afterthemerger,thenewbankhadatotalcapitalof500millionringgit(133millionUSdolla r).TheanalystsassessedthatitwasanidealmergersinceECMLibrahadstrengthoneconsul ting,whileAvenuewastheleadingassetmanagementcompany.

The notable transnational merger between ABN AMRO of the Netherlands and Barclays PLC of Britain involved Barclays purchasing each share of ABN AMRO for $49.25, totaling a deal value of $91.16 billion This merger aimed to enhance profitability for the newly formed banks, significantly outperforming global GDP growth, thereby creating a competitive advantage, improving customer service, and increasing shareholder profits Prior to the merger, ABN AMRO was ranked eighth in Europe and thirteenth globally, operating 4,500 branches across 53 countries with approximately 11,000 employees and total assets of €999 billion Facing changing market demands, ABN AMRO aimed to rank among the top five corporations in Europe by return on equity but struggled with rising operational expenses that outpaced revenue growth, leading to a 69.9% reduction in output and a 192% increase in annual bad debts by 2006 After various strategies for acquisition or merger due to concerns over the bank's share price not reflecting its true asset value, Barclays ultimately agreed to acquire ABN AMRO at a price slightly above its closing price prior to the announcement.

The process of international economic integration necessitates that each economic sector in the country enhances its financial resources to boost competitiveness As the banking sector gradually removes barriers to foreign bank market entry, domestic commercial banks, particularly joint-stock banks, must strengthen their associations to establish robust financial corporations and retail banks capable of competing with foreign entities Chapter 2 highlights the competitiveness of the Commercial Joint Stock Banking sector, discusses the trend of foreign banks buying back shares of Vietnamese Commercial Joint Stock Banks, and concludes that mergers are essential for increasing competitiveness Additionally, the trend of bank mergers and acquisitions is an inevitable aspect of the recent international economic landscape.

Thesolutionsforimplementationofbankmergersandacquisitions

3.1.1 Exploring,searching ,evaluatingandcarefully surveyingt h e p o t e n t i a l targets

Before conducting research and evaluation on target banks, the acquiring bank must clearly define its search criteria and long-term strategic goals, such as expanding its operational network, enhancing personnel quality, diversifying its client base, and increasing charter capital Once these standards are established, the acquiring bank will collaborate with professional brokerage and consulting firms to facilitate its merger and acquisition activities These professionals assist throughout the implementation process, from identifying a target bank to conducting thorough evaluations, developing memorandums, drafting sale contracts, and engaging in negotiations with the target bank's management Their involvement ensures a more efficient, objective search for potential target banks Additionally, the assessment of the target is crucial, as it significantly impacts the success or failure of the acquiring bank post-merger.

Thesurveyoftarget bankis usuallycarriedoutbytheconsultingu ni ts w h ic h have thedataroom,therequiringbankcanrequestformoreinformationabo utt h e targetbanks,suchastheclientsystem,thestructureofproductsandservices, capitalstockstructure,transactionbureaus,humanresourcestructure

In the careful examination process of a potential target for mergers and acquisitions, two core issues must be evaluated: the financial and legal situations of the target bank Assessing the asset situation is crucial for determining the operational scale, debt status, and business efficiency, which ultimately helps in valuing the target company Legal evaluation focuses on understanding the legal status of the assets owned by the target bank, ensuring compliance, and identifying potential legal issues A key element in assessing financial stability is the audit report; therefore, it is essential for the acquiring bank to hire a reputable foreign auditor to ensure reliability Additionally, engaging a reputable law firm is necessary to clarify the legal personality, legitimate rights, and obligations of the target bank, as well as the legal regime applicable to various types of property, labor contracts, vouchers, and land records.

Theexplorationworkiscarriedoutbyworkingwiththeconsultingunitsw h ich h a v e t h e d a t a roomt o h e l p a c q u i r i n g b a n k t o l e a r n a b o u t t h e a v a i l a b l e targets,ifthereisanyonesuitablewiththecriteriaoftheacquiringbank,thesur v ey and evaluationonthattargetwillbeconducted.

Theevaluationonthetargetbankisalsoimportant,especiallythedeve lopmento f i n d i c a t o r s t o a s s e s s , s u c h a s R O A , R O E , p r o f i t margin,o u tst an d i n g loans/ totalassets,percentageofturnoverandprofitabilityofpr o d u cts andservicesan dincomebythenumberofcustomers, levelofed ucat io na n d e x p e r i e n c e q u a l i f i c a t i o n s o f s t a f f , f u n d i n g markets h a r e , l o a n s marketshare

The development of criteria for selecting target banks is crucial in the merger and acquisition process Each bank's unique characteristics necessitate that the executive board define a long-term development strategy, which should be adjusted based on macroeconomic conditions and the monetary policy of the State Bank To identify potential target banks for mergers and acquisitions, banks must carefully assess their advantages and disadvantages In established financial markets like the U.S and Europe, selection criteria typically include capital, market share, customer systems, and product strategy However, in Vietnam's emerging financial market, which has developed over the past decade, the criteria for selecting target banks differ slightly, focusing on factors such as network transactions, personnel, financial capacity, client systems, products, and market share.

Regardingn e t w o r k t r a n s a c t i o n s,n o r m a l l y t h e l a r g e b a n k s h a v e w i d e n etw or k oftradingincitiesandprovincesthroughoutthecountry,butins omeruralareas,thereisonlyveryf e w transactionbureausoftheStateownedComm ercial Banks,thereforethedevelopmentofcardproducts,loansforindividualb usinesshouseholds,individualsintheseareascannotashighasinurbanareas. Forsmallbanksshiftingfromruralbanks,themajorityofthosehastransactionnetwor kincertainlocalitiesforexampleVietnamThuongTinC o m m e r c i a l

Joint Stock Banks, such as Ocean Commercial Joint Stock Bank, primarily operate in urban areas, with significant activity in Hai Duong and Hung Yen provinces In contrast, My Xuyen Commercial Joint Stock Bank focuses on An Giang province Many large Commercial Joint Stock Banks have rapidly expanded in urban regions but have minimal market presence in rural areas Consequently, their strategic aim is to penetrate these underserved rural markets, often targeting smaller Commercial Joint Stock Banks that have established transaction networks in these regions.

Regardingh u m a n r e s o u r c e s,i n r e c e n t t i m e s , o n e f o r t h e f i n a n c i a l - bank in g s e c t o r h a v e b e c o m e s c a r c e , t h e r e iss e r i o u s s h o r t a g e o f middlea n d s e n i o r personnel,sohumanresourcesisatoughproblemforthebank s.Thetoorapidg r o w t h o f network, thep e n e t r a t i o n off o r e i g n b a n k s i n t o Vietnamesefinancial-b a n k i n g marketc r e a t e s morea n d m o r e c o m p e t i t i v e p r e s s u r e s f o r V i e t n a m c o m m e r c i a l b a n k s i n g e n e r a l a n d V i e t n a m C o m m e r c i a l J o i n t S t o c k B a n k s i n p a r t i c u l a r S i n c e t h e n J S C B s d e v e l o p s t r a t e g i e s t o e x p a n d t r a d i n g n et wor ks, developnewproductswhichmakespersonnelrecruitmentm ored i f f i cu lt t h a n e v e r , e s p e c i a l l y f o r middlea n d s e n i o r p e r s o n n e l T h e r e f o r e , t o solvet h e h u m a n r e s o u r c e s p r o b l e m , t h e C o m m e r c i a l

J o i n t S t o c k B a n k s o f t e n “ d r a w " staffofeachotheroroftheSOCBs,thefinancialh umanresourcesdonotincreasesignificantlybutmainlyshiftfromthisbanktoanotherwhi chmakesthec o m p l e x i o n o n p e r s o n n e l d i f f i c u l t f o r t h e entireb a n k i n g s y s t e m o f Vietnam.Moreover,whenbankswanttodevelopnewproducts,theymu sthavepersonnelt o r e s e a r c h and develop,butthereisnoor shortageofpersonnelwithexperienceont h o s e p r o d u c t s i n t h e s e b a n k , t h u s b a n k s m u s t f i n d a n d d r a w fromo t h e r s T herefo re, t h e g o a l o f humanr e s o u r c e s c a n b e i d e n t i f i e d a s a c r i t e r i o n f o r mergera n d a c q u i s i t i o n w h e n a c q u i r i n g b a n k s h a v e t h e f i n a n c i a l r e s o u r c e s t o develo p , butarelackinmiddleandseniorpersonnel.Orwhensmallbankslacks t a f f torunth eirbankstopass theincreasingly fiercecompetition, thepathtomergewit hlargebankswillbeconsidered.

Regardingf i n a n c i a l c a p a c i t y,f o r t h e V i e t n a m B a n ks , t h i s c r i t e r i o n i s alsoveryi m p o r t a n t A s p r e s s u r e t o i n c r e a s e c h a r t e r cap italt o meetc a p i t a l r equ ir emen ts inDecree141/2006/ND-

CPfrom2008to2010,theVietnamC o m m e r c i a l JointStockBanksmustincreasethei rcapitaltomanytimesthanthecurrentchartercapitalespeciallygroupof27smal lbankssuchas:MyXuyen,DaiA,NorthAsia,NamA,Southernbank,Nam

The global financial crisis originating in the U.S has had far-reaching effects, leading many foreign banks to depend on government intervention Consequently, securities markets worldwide, including Vietnam's, have experienced significant declines According to the IMF's world economy report, global growth was just 3.9% in 2008, with projections of slowing to approximately 3.0% in 2009, marking a global economic recession HSBC's fourth-quarter economic report for 2008 predicted Vietnam's economic growth at 5.6% for 2009 and 6.5% for 2010 Economic experts believe the repercussions of the U.S financial crisis could result in the bankruptcy of numerous U.S and European banks.

Vietnam's banking sector is poised to face significant challenges in the coming times due to ongoing economic difficulties As the economy struggles, commercial joint-stock banks in Vietnam will be particularly impacted, leading to a decline in business efficiency and a decrease in the attractiveness of banking stocks This situation complicates the issuance of new shares and limits opportunities for success Additionally, foreign banks are also grappling with their own crises, making it difficult for them to engage as strategic investors in the local market Consequently, larger banks may look to acquire and merge with smaller banks, while the latter must seek mergers to mitigate losses Mid-sized banks, by pursuing mergers, can enhance their competitiveness against foreign banks in Vietnam's financial market.

Regardingclientsystem,regardingthelargebankswhichspecializeinlendingtolar gegroups,corporationsandenterprises,theirmarketshareoflendingtoindividualcustomers isverylow.Thus,largebanksoftenfindsmallerbankswith capacityonlendingtoindividualstoexploitsubjectgroupofofficersandemployeesoflargeg roups,corporationsandenterprises.Atthesametime,smallbankshavethemarketshareofle ndingtosmallandmediumenterpriseswilltakeadvantageofcustomerswhoarecompanym emberofthelargeGroup,Corporation.Andalsowhentheenterpriseswhicharecustomersof smallbanks,havedemandofcapitaltofinancelargeprojects,thesmallbankswillbedifficultt omeetthecapitaldemandandtheevaluationability,soitwillbeanopportunityforthelargeba nkstodeveloptheirclientsystems.Thus,intheincreasinglyfiercecompetitionconditionast oday,theCommercialJointStockBanksshouldchoosethetargetascustomersystemtoperfo rmtheirmergerandacquisitionactivities.

Ift h e p r o c e s s o f a c q u i r i n g t h e t a r g e t b a n k r e c e i v e s t h e c o n s e n t o f t h e executive boardofthetargetbank,itisnotonlyfavorableforthei mp l em en t at i o n durationofthedealbutalsocreateacooperationenvironment b e tw e e n the twoexecutiveboards, whichisusefulintheprocess of restructuringthebankafterthemerger.

Normally,fromthestarttothefinishofbankmergersandacquisitionsintheworld, alotofmeetingsbetweenleadersofthepartiestakeplace,andusuallyalongwitha thirdpar ty,theconsultingunit,whoactsasa bridget o solvetheproblemfortheparties.Thismeetin gperiodisusuallyeasytoleadtothenon- cooperationsincetheparties'interestsareatstake,acquiredbankisafraidtolosecontrolof hisbank,moreover,duetothecharacteristicsofAsian,thebossesoftheacquiredbankwill notbeeasytobeacceptedtobepurchasedsimply.

BecausetheVietnamCommercialJointStockBankshavedevelopedoverthecourseof10 years,theexpectationofthebankersisveryhigh.However,theperiodofinternationaleco nomicintegrationistakingplace,countriesareincreasinglyinvolvingintheglobalvaluec hainsothatthebankingsectorisdifficulttoavoidfromstrugglingformarketsharesbyfore ignbanks.Theforeignbanksoftenhave ahistoryofseveralhundredyears,soitiscertaintoseethecleardifferencefromtheirbusine ssexperience,corporatecultureandprofessionalism.Therefore,theVietnamesebankss houldbeawarethatthefiercecompetitiontimeisaboutt o happen,itisnecessarytojoinfor cestogethertocreatelargerbanks,morepowerful,enoughcapacitytocompetewithforeig nbanks.

Ther e a l i t y showst h a t theb a n k e r n e e d s t o l e f t h i s " s e l f " r e a r w a r d s t o d i s cu s s a n d n e g o t i a t e t o g e t h e r w i t h t h e u l t i m a t e g o a l i s t o c r e a t e a n e w b a n k whichismorestronglythantwoormorebanksaddtogether,c reateastrongerc o m p e t i t i v e n e s s b e f o r e b e i n g t a k e o v e r byt h e f o r e i g n b a n k s C o o p e r a t i o n f o r strongerandsustainabledevelopmentisthepri ncipletohelpthenegotiationtob ri n g natureofattachmentandsolidarityinsteadofbe ingannexed.

Resultsofnegotiationsshallhelptheacquiringbanktodefineitsnextstrategictoca rryoutsuccessfullythedealwithminimalcosts.T o doso,theproblemofdeterminingthea cquisitionpriceisastageinfluencingalottothecostofthedeal.

The executive board of the acquiring bank must develop a strategic plan for engaging and negotiating with the executive board of the target bank to achieve optimal outcomes The leadership of the negotiating team plays a crucial role, requiring a balance of firmness and flexibility to meet the proposed goals Typically, the target bank is reluctant to be acquired or aims to secure a high sale price Therefore, the negotiating team must effectively communicate the benefits of synergy, emphasizing advantages for shareholders, the target bank's executive board, and employees Throughout the negotiations, the acquiring bank must establish clear goals and be prepared to withdraw if conditions are unfavorable, while also presenting compelling arguments to the target bank’s executive board The price of the deal is heavily influenced by this negotiation phase.

The executive board of the target bank may find the acquisition challenging to accept, as it suggests potential issues with their management and operational capabilities It is essential for the board to thoroughly evaluate both the objective and subjective factors surrounding the acquisition, including the potential benefits and drawbacks With increasing competition in the banking sector, merging with other banks could create stronger institutions capable of overcoming challenges and enhancing competitiveness against foreign banks The board must clearly define the bank's development objectives and the challenges ahead If a merger is deemed the best solution to navigate difficulties, collaborating with the acquiring banks to expedite negotiations can save time and costs for all involved parties.

Theevaluationof thegrowthpotentialofthebankafterthemergerisveryimportantton e g o t i a t e t h e p u r c h a s e p r i c e T h e c u s t o m e r s y s t e m oft h e t a r g e r t b an kcouldnotensure l o n g termstability andquality oft h e st af f oft h e target b an kc o u l d n o t b e c o n s i s t e n t w i t h d e v e l o p m e n t d e m a n d o r c o u l d n o t e n s u r e sustai nability.Therefore,whenassessingthefuturevalueofthebankafterthemer ger,itisnecessarytomakesureofexcludingalltheriskfactorsandp r e v e n t i n g thec hangesduetotheobjectiveandsubjectiveconditions.

Identifyingacquisitionprice inar e a s o n a b l e mannerisveryd i f f i c u l t b e c a u s e t h e f i n a n c i a l - b a n k i n g s y s t e m o f V i e t n a m i s a f f e c t e d muchbyt h e a d m i n i s t r a t i v e m a c r o e c o n o m i c p o l i c i e s H o w e v e r , t o e n s u r e o f o f f e r i n g a r e a s o n ab l e purchasepricefortheshareholdersofthemergeredbank,the strategicplanningofthebankafterthemerger,thequantificationofalltheriskfac tors inoperatingthebankafterthemergerisveryi m p o r t a n t a n d time- c o n s u m i n g Therefore,usingtheconsultingproductsofthefinancialinstitutions isquitesafesolutioninmakingthemostreasonableaquisitioncost.

Thebuyercan usethe targetofmarketpricetoearningsper shareofthe bankings e c t o r a s r e f e r e n c e p a r a m e t e r f o r t h e c a l c u l a t i o n o f t h e p u r c h a s e p r i c e o f t h e targetbank.

E:r e f e r e n c e fromi n d e x o f marketp r i c e t o a v e r a g e e a r n i n g s p e r s h a r e o f Commercial Joint StockBankingsectorinVietnamor otherAsiancountrieslikeMalaysia,Indonesia,Thailand

Thismethodcanassesstheperformanceofbanksas wellasthequalityofth esystem.However,theuseofreferencetargetwillnota ccuratelyreflecttherealvalueofthetargetbanksbecausethecalculationoftheave ragetargetofthei n d u st ry isbasedonaverage data ofthe wholesector,while e achbankhasitsowncharacteristicswithspecificpotential.Toovercomethi sdrawbackwecanrefertargetofthebankswiththesamesizeofcapital,sameoperatio nnetworktothet a r g e t b a n k i n V i e t n a m o r t h e b a n k s int h e r e g i o n h a v e s i m i l a r l e v e l s o f d ev el op men t suchasSoutheastAsiancountries.

Thismethodb e g i n s byusingt h e i n de x o f p r i c e t o a v e r a g e s a le s oft h e entireVietnamesebankingsectorasthereferenceparameterorreferencewithan umberofemergingmarketsinAsiasuchasMalaysia,IndonesiaandThailand.Thec alculationisasfollows:

SratioofthebankingsectorofthesecuritiesmarketofMalaysia,Indonesia,Thailand Sharepriceofthetargetbank=RevenuepersharexP/S

Thismethodcandemonstratetheoperationscaleofbankbutcannotreflecttheop e rat io n qualityofeachbanksincenetrevenuetargetdoesnotfullyreflecttheb u s i n e s s performanceofeachbank.

Thisi s a n importantv a l u a t i o n t o o l i n b u s i n e s s mergera n d a c q u i s i t i o n , e s p e c i a l l y i n financialandbankingsector.ThepurposeoftheDCFmethodistod e f i n e thecurre ntvalueofthetargetbankbasedontheestimationoffuturecashf l o w

Thismethodi s l i m i t e d o n t h e WACCc a l c u l a t i o n , si n c e e s t i m a t e d c a s h f lo w ofthetargetbankdependsentirelyonthesubjectiveopinionofthecalcul ator.Ifthesurveyonthetargetbankisnotcarriedoutcarefully,thefactorsa f f e c t i n g the businessresultsofthebankarenotquantifiedfullyandtheimpacto f macroeconomi cpoliciestotheperformanceofthetargetbankisnotassessed fully,theestimatedcashflowwillnotrelativelyaccuratelyreflecttherealvalueo f t h e t a r ge t b a n k H o w e v e r th is m e t h o d i s s t i l l moreh i g h l y feasible t h a n t he othersonitsmethodology.

Therefore,torelativelyaccuratelyassessthevalueofthetargetbank,thea c q u i r i n g bankneedstocombine theabovevaluationmethodsbyusing theratioweighttogetmoreappropriatelyresultandensurehighpracticality,such astheapplicationofusingweightasbelow

Shareprice=resultcalculatedwithmethodDCFx40%+resultscalculatedwithmethodP/ Ex30%+resultcalculatedwithmethodP/Sx30%.

In bank mergers and acquisitions, payment methods typically involve cash or shares The acquiring bank usually compensates the shareholders of the target bank in cash, contingent on having sufficient surplus funds or external financing However, for Vietnamese banks, share payments are often more effective due to the challenging market conditions that make it difficult to secure sponsors for raising adequate capital Additionally, the charter capital of Vietnamese banks remains modest compared to other countries in the region, with Vietcombank, the largest joint-stock commercial bank in Vietnam, having a charter capital of only 15 trillion VND.

0 b i l l i o n d o n g , w h i l e BangkokBank-Thailand has chartercapital of3,674.2millionUS dollar( 2 0 0 6 ) , M a y b a n k o f Malaysiah a s c h a r t e r c a p i t a l o f 4 , 2 1 4 million

U S d o l l a r Therefore thechoiceofpaymentmethodinsharesisthemostfeasible. Aquiringb an k w i l l i s s u e a n a m o u n t o f s h a r e s f o r s h a r e h o l d e r s o f t h e a c q u i r e d b a n k toexchangeforsharesofacquiringbankingunderadeterminedr ate,andthentheshareholdersoftheacquiredbankbecomeonesoftheacquiringbank.Therateo f exchange isjusttheacquisition priceofthe deal.Ifthe shareho ldersofthe targetbankdonotwanttoholdthesharesofthemergedbank,theymaysellit.

Fore x a m p l e , f o r t h e p a y m e n t m e t h o d i n mergera n d a c q u i s i t i o n b u s i n e s s o f JPMorganChaseand Ban k One, each sh are ofB a n k One w a s ex changedfor

After the merger, the new bank will inherit two distinct corporate cultures from the acquiring and target banks To foster internal cooperation, the new executive board must prioritize building a unified corporate culture that aligns with the new strategic direction Prolonged maintenance of separate cultures can lead to divisions and hinder collaboration among staff Therefore, bank leaders must develop an action plan to facilitate this cultural transformation, emphasizing the importance of support from all members and effective training on the new culture The management board should lead by example, adjusting their behavior to reflect the changes, while staff must be clear on expectations and how to demonstrate the new behaviors in practice Consequently, following the merger, banks should implement specific measures to ensure a successful integration of corporate cultures.

Firstly:D e v e l o p i n g s t a t e m e n t s o f v a l u e s a n d b e l i e f s I n e a c h s e c t i o n , d i s c u s s i o n groupscanbeorganizedtoconveythemission,vis ionandvaluesofthebankafterthemergerintowordsandexplaintheimpactofth estatementtow o r k o f e a c h employee.T h i s a f f e c t s employee’sp e r c e p t i o n o n t h e c o m m o n u n d e r s t a n d i n g o n c u l t u r a l e n v i r o n m e n t t h a t t h e b a n k w a n t s t o b u i l d a n d t h e actions,thebehaviorthattheyhavetoshowt oreflectthenewculture.

Secondly:E f f e c t i v e c o m m u n i c a t i o n A l l e m p l o y e e s m u s t b e i n f o r m e d ab o u t theculturalchangeprocessofthebanktoensure theircommitmentandsuccessofculturalconversion.Employeesshouldbeencoura gedt h a t whatis expectedf r o m t h e m i s v e r y i m p o r t a n t i n c h a n g i n g t h e c o r p o r a t e c u l t u r e mosteffectively.

Sother e v i e w o f internalp o l i c i e s a n d r u l e s s u c h a s c o o r d i n a t i o n r egulationsamongdepartments,regulationsonrewardsandpunishments,rule s,workingregulations mustbeadjustedinaccordancewithnewcorporatecul ture.

The successful merger of the banks hinges on effectively combining their brands The executive boards must collaborate to identify meaningful differences in the clients' perceptions of both brands Choosing a leading brand is a challenging task, as one brand will eventually fade, leaving only a hollow shell without ongoing brand-building efforts or budget allocations Over time, the selected brand will be nurtured to establish a strong identity for the newly merged bank The positive attributes of the phased-out brand will aid in transitioning customer loyalty to the new brand.

The merger will significantly impact staff dynamics, leading to potential dissatisfaction due to changes in the work environment and management Employees may feel like they are starting anew, which could prompt some to seek employment elsewhere, depending on the bank's post-merger treatment policies To retain top talent and align with long-term strategic goals, the executive board must implement effective retention strategies Common practices include offering preferential share options, increasing salaries, and providing educational benefits However, fostering loyalty requires a long-term commitment from management rather than a quick financial fix Employees desire salary increases, but true loyalty is cultivated through consistent support and clear advancement pathways that allow them to set and achieve personal goals.

Therefore, when taking over a new teamfromtheacquiredoracquiringb an k, themanagersfromthedepartmentstothelead ersmustdirectlycontactandc l o se tostafftoencouragethemtopassthepostperi odofmergertoreachtheintegrationprocessinordertocreateasolidarity andattach mentpoweroftheb a n k aftermergering.Sincethenmanagers,togetherwithstaff,cansharetheirk n o t s inworkwiththemostopeningway,toeliminatethepsychologic albarriersf o r newemployees.

Thesolutionsforreducingtheinefficienciesafterthemerger

Intheprocessofbankmergerimplementation,itisverylikelythatcustomersreno unceusingproductsandservicesofthebanktoswitchtootherbanksbecausethebankconc entratestoomuchinthemergerprocessbutskipsthecustomercareprogram,orbecauseth ecustomersheartheunofficialinformationwhichcausesthemmisunderstandingsucha s thebankwillmergewithotherbanksinthecomingtimeandthenwillreducetheinterestrat eo r itwillbedifficulttowithdrawprincipalsincethepolicyofthebankwillchange,thenc ustomerswillmovetoanotherbanktodeposit,orsomekeypersonnelarenotfullyinforme daboutthetreatmentpolicyofthebankafterthemergerandthentheywillseekotherbankst owork.Suchthingsareeasilytohappen,sotoreducetherisktheymayencounter,thebanks houldapplythefollowingsolutions:

Forkeye m p l o y e e s , t h e e x e c u t i v e b o a r d o f t h e b a n k s h o u l d c a r r y o u t d i s se mi n ati n g informationaboutthemergerthroughinternalmee tings,andaskmanagersatintermediatelevelstoinformtotheiremployeesinfo rmationaboutt h e mergerofthebank,policiesandregulationscanbeappliedaft erthemergerto createpeaceofmindpsychologyforemployees Depending onthestageoft h e merger,theexecutiveboardshouldprovidethenecessaryinformati onforthep u r p o s e ofoperatingthebank'sactivitiestakenplacenormallyduringthemer gerp r o c e s s I t i s verynecessary int h i s p h a s e t o c r e a t e f a i t h a n d s e n s e o f r esp on sibi li ty ofemployeesonthefutureprospectsofthebankafterthemerger.

Forcustomers,itisnecessarytodeveloppublicinformationchannels ino r d e r t o a v o i d m i s u n d e r s t a n d i n g f r o m c u s t o m e r s a n d t h a t theyfe els e c u r e tocontinuet h e i r t r a n s a c t i o n s , a n d a l s o e x p l a i n t h e w r o n g i n f o r m a t i o n a n d a v o i d creatingdistortedinformationaffectingbank’sprestige.

Bankalsoshould developplans todiscloseinformation tocustome rsineach s t a g e s o t h a t theyf e e l s e c u r e ind e a l i n g w i t h b a n k d u r i n g t h e mergerprocess.Atthesametime,theroleofemployeesisnotsmallint heprocessofprovidingandexplaininginformationtocustomers Thelos sofcustomersisamattern e e d e d t o b e c o n c e r n e d i n e a c h b a n k mergera n d a c q u i s i t i o n b u s i n e s s T h e r e f o r e the exec ut iv eb oar d n e e d s t o e v a l u a t e fullythei m p o r t a n t im pac t of informationo n c u r r e n t customers y s t e m ; c u s t o m e r c a r e p r o g r a m s n e e d s t o b e maintainednormallyandthefaithfromc urrentcustomersystemmustbec r e a t e d

Oneofthereasonsforthefailureofthebankafterthemergeristhatthes u r v ey andr e s e a r c h ont h e r e a l p o t e n t i a l o f t h e t a r g e t b a n k i s n o t c a r r i e d o u t thoroughlywhichleadstooverestimatingtheeffectiveness ofthe synergyeffect.T o u n d e r s t a n d intimatelythesynergypotentialofthe targetbankisnoteasyandt a k e s a l o t o f time,s o m e t i m e s t h e a c q u i r i n g b a n k m a y t a k e yearst o p r e p a r e , collect a n d u p d a t e i n f o r m a t i o n o f t h e s e l e c t e d t a r g e t b a n k b e f o r e r e a c h i n g a decision.Therefore,tofullyevaluat ethepotentialofsynergyeffect,thefactorofindependentconsultantisoften ch ose n byt hea c q u i r i n g o ft en forc o n s u l ta t i o n a n d preparationforaconvenientandefficient mergerandacquisitionprocess.

Identifyinge f f e c t b r o u g h t o u t a f t e r t h e m e r g e r , c o m p e t i t i v e n e s s o f t h e b a n k afterthemerger,marketshares,abilityofmarketsharedevelop ment,riskm a n a g e m e n t c a p a b i l i t y , personnelq u a l i t y , customers y s t e m , macroeconomicf actorsa f f e c t i n g t h e b u s i n e s s p l a n o f t h e b a n k a f t e r t h e merger a r e s u c h criteriawhichneedtobefullyanalyzedd ur in g theimplementation ofsyn er gy evaluation.

Inadequate assessment and appraisal during mergers often lead to acquiring banks facing significant issues with bad debts, which negatively impact their business performance To mitigate these risks, acquiring banks must conduct thorough verification and assessment of the existing debts of the target banks Engaging a qualified and trustworthy law firm is essential for a comprehensive evaluation of the target bank's assets and liabilities Vietnamese banks typically classify bad debts as those overdue for more than 90 days, while international banks assess them based on the solvency concerns of the debtors Thus, it is crucial for acquiring banks to verify debts according to international standards to avoid potential losses post-merger.

So,thesebanks musthirequalified,trustable andreputableauditors inthemarkettoverifyaccuratelyandfullyallthedebtsofthetargetbank.Therefo ret h e consultation withinternationalauditors isnecessary questionto ensure thehigh est e f f i c i e n c y i n t h e p r o c e s s o f t a r g e t b a n k a p p r a i s a l toq u a n t i f y a l l t h e problemsthatmayariseinordertomaketheappropriateacqui sitionprice.

Theissueofinformationtechnologysystemofbankisveryimportant;ifaf terthemergerthetransactionsystems of the twobanksarenotlinkedtogether,itwillcausetroubleinthebankadministrationand management.Therefore,theacquiringbankhastoworkwithcontractorspro vidingtradingsoftwarefortheacqu ir in gbankandthetargetbanktopreparef orthesystemconsolidation.Ifitisnotcarefullyp r e p a r e d , stagnancyinbusines sactivitiescanbehappenedc a u s i n g w o r r i e d p s y c h o l o g y f o r c u s t o m e r s , a f f e c t i n g t h e b u s i n e s s p l a n o f t h e bankafterthemerger.Thepromotionof placinganorderwithacontractorfort h e i n f o r m a t i o n t e c h n o l o g y p r o g r a m usedf o r t h e t w o b a n k s i s a matterofc o n c e r n Thisisimportantworktominimizethelossescanbeencounter edsucha s : l o s s o f d a t a , i n c o r r e c t d a t a a b o u t t h e i n f o r m a t i o n c u s t o m e r , inabilitytoa c c e s s , inabilitytoconnecttransactionsbetweenbranches

SolutionsontheroleofinvestmentbanksinbankmergersandacquisitionsinVietnam 86

Investmentb a n k w o r k s a s a u n i t a r r a n g i n g c a p i ta l f o r en t e r p r i s e s, p r o v i d i n g consultancyo n securitiesissuance,securities issueguarantee,enterprisefinancialconsultancy,enterprisemergerandacquisit ionconsultancy,r e s e a r c h andanalysisofinformationoneconomic,industryand enterprise,securitiesi n v e s t m e n t a c t i v i t i e s , s e c u r i t i e s b r o k e r a g e Som el a r g e investmentb a n k s int h e w o r l d a r e G o l d m a n S a c h s , M o r g a n S t a n l e y , C r e d i t S u i s s e F i r s t Boston,Citigroup'sGlobalCorporateInvestment

Bank,JPMorganChase InVietnam,somesecuritiescompanieshaveshiftedtheir operationmodelto investmentbankssuchasSaigonSecuritiesInc.

Investment banks such as SSI, ACB Securities Co Ltd, Thang Long Securities Joint Stock Company, and Bao Viet Securities JSC specialize in brokerage, enterprise merger and acquisition consultancy, restructuring, and capital arrangements They serve as intermediaries between buyers and sellers, creating a comprehensive information database to connect parties interested in transactions These banks develop detailed plans for merger and acquisition implementation, leveraging their experience in managing all aspects of the process, including document preparation, planning, designing MOUs, negotiating contracts, and executing payment methods By collaborating with investment banks, companies looking to undertake mergers and acquisitions can effectively navigate the complexities of the process, benefiting from the banks' expertise in consultancy and brokerage within this sector.

SolutionsontheroleoftheGovernmentincontrolandmanagementofbankmergersand acquisitions

Currently, there is no legal framework governing bank mergers and acquisitions, making the process challenging and time-consuming for banks seeking to merge Banks must submit their applications to the State Bank for approval and await a written response, with no established procedures or timelines for resolving merger requests This reliance on the State Bank's subjective intentions highlights the need for a specific legal framework tailored to bank mergers and trading activities To facilitate a favorable and consistent merger process in line with international practices, it is crucial for the State to expedite the drafting of relevant legal documents This will ensure that bank mergers and trading activities operate effectively within market rules, benefiting banks and shareholders while enhancing collaboration and competitiveness among commercial banks, particularly Joint Stock banks, before potential foreign acquisitions.

The State Bank plays a crucial role in managing bank mergers and acquisitions in Vietnam, ensuring these activities are conducted openly and transparently It is essential to establish clear guidelines and controls to comply with legal regulations and align with the banking sector's development strategy The State Bank must safeguard the interests of minority shareholders, employees, and customers while regulating market share provisions to prevent monopolistic practices and maintain competition in the financial sector Additionally, objectives for bank mergers and acquisitions should be clearly defined to prevent large corporations from manipulating banks for their own business interests Stricter regulations on capital contributions from non-financial organizations are necessary to avoid undue control over banks Given the sensitivity of banks to economic fluctuations, lessons from the U.S and European financial crises are invaluable for Vietnam in developing effective management and regulatory frameworks for its domestic financial and banking market.

Establishing regulations on foreign investors' share purchases in commercial joint-stock banks is crucial, as allowing them to hold up to 30% of shares would grant them significant influence in management When a foreign investor acts as a strategic partner for multiple banks, competition may diminish due to aligned strategies Given the weaknesses in the risk management systems of banks and the State Bank's controls, opening the market too broadly could be risky Historical financial crises in Thailand and Indonesia in 1997 serve as cautionary examples Additionally, China maintains a foreign investment cap at 29.9% to manage foreign influence while still attracting capital, offering insights for Vietnam in developing its regulatory framework.

The State Bank needs to develop a long-term banking system development plan for the next 10 to 20 years to ensure stable growth, stabilize the capital market, and stimulate production and business for enterprises This strategic plan will assist those looking to establish new banks or pursue mergers and acquisitions by providing clear orientations for implementation Additionally, the focus on urban areas may create imbalances in banking development, leading to monopolies of state banks in rural regions, as Commercial Joint Stock Banks often find these markets less attractive To encourage equal development across regions, it is essential for the State to implement incentive policies that attract these banks to expand their operations into rural areas Furthermore, the banking system development strategy will enable lawmakers to establish appropriate legal provisions to effectively control and manage domestic banking activities in alignment with macro objectives.

Merger and acquisition transactions are commercial and financial processes that necessitate a market mechanism for effective selling, bidding, and pricing information The M&A market is established when firms become valuable assets to buyers and sellers, creating an organized marketplace However, business sales within this market are only viable when developed to a certain extent, as a market cannot thrive in isolation The existence of the M&A market relies on a robust legal framework provided by the state, ensuring that transactions occur smoothly and efficiently.

Anywell- functioningmarketwantsandneedsadevelopmentfactorthati s b a s i c a l l y h u m a n r e s o u r c e s A b u n d a n t h u m a n r e s o u r c e s , b a s i c t r a i n i n g a n d e x p e r t i s e willbeapreconditionformarketdevelopment.Mergerandacquisition isnoexception.

Fora n a s c e n t market,n e w developmento f o u r country,t h e p o t e n t i a l - u n t a p p e d opportunitythere aremany,thisisthe destinationtoward corporations,f o r e i g n c o m p a n i e s w i t h s t r o n g f i n a n c i a l r e s o u r c e s c o m b i n e d w i t h e x p e r i e n c e , and thepurchase,sale,mergeristheshortest path,thecost savings(ifconductedp r o p er l y an d smoothly)toaforeigninvestorcanenterthemarketVietnam,takead v a n t a g e ofthebrand,theexistingculturalpracticesofindigenouscompaniesan d insod oingtoadapt,growanddominatethemarket.

The competitive landscape of Vietnam's Joint Stock Commercial Banking sector necessitates mergers and acquisitions, aligning with global economic trends Chapter 3 of the thesis outlines strategies to enhance bank merger and acquisition activities for optimal performance Additionally, it recommends that the State Bank address regulatory frameworks for these mergers and acquisitions, focusing on effective management and the long-term development strategy of the commercial banking system in Vietnam.

Int h e f a c e ofn e w c h a l l e n g e s a n d o p p o r t u n i t i e s , V i e t n a m c o m m e r c i a l j o i n t sto ck ban ks n e e d t o l o o k a t l o n g - t e r m dev el op men t st r a t e g y tog ras p t h e o p p o r t u n i t i e s toincreasetheirvalue throughmergerandacquisitionactivities.

- Thes i t u a t i o n o f buyingb a c k s h a r e s inj o i n t s t o c k c o m m e r c i a l b a n k s , i nevitability,o b j e c t i v e n e s s o f mergera n d a c q u i s i t i o n a c t i v i t i e s i n a c c o r d a n c e w i t h internationaleconomicdevelopmenttrend;

- Basedonthe competitivenesso f thejointstockcommercialb a n k s , inevitability,o b j e c t i v e n e s s a n d c o n f o r m a b i l i t y w i t h internationaleconomicd e v e l o p m e n t tren d,theauthorhasproposedsolutionsofbankmergerandacquisitioninVietnam;

Bank mergers and acquisitions in Vietnam are still relatively new, with recent discussions in the media highlighting this issue However, the activities of Vietnamese joint-stock commercial banks have not fully aligned with market mechanisms The research presented may have limitations, but the author aims to contribute solutions that could stimulate the development of the bank merger and acquisition market, enhancing competitiveness against foreign banks The author also hopes for more extensive future studies on financial markets to support the genuine growth of the financial-banking sector.

6 Ths.TrầnĐìnhCungvà Ths.LưuMinhĐức(2007),Thâutómvà hợpnhấtt ừkhíacạnhquảntrịcôngty:lýluận,kinhnghiệmquốctếv à thựctiễnViệtNam.

7 BùiTấnĐịnh(2007),Nângcaonănglựccạnhtranhcủacácngânhàngthươn gmạiViệtNamkhiViệtNamchínhthứcgianhậpTổchứcthươngmạithếgiới(W TO)

8 VũViệtPhong(2007),Xuhướngsápnhậpngânhàngtrongquátrìnhhộinhậ p kinhtế, TạpchíHỗtrợpháttriểnsố18tháng12/2007.

9 TS.NguyễnTrọngTài(2008),Canhtranhngânhàngthươngmại– nhìntừgócđộlýluậnvàthựctiễntạiViệtNam,TạpchíNgânhàngsố4,tháng2năm2008.

Tiêu đề	The Factor Affecting Merger and Acquisition Activities of T
Tác giả	NGUYEN MINH PHUONG
Người hướng dẫn	Associate Prof. Dr. DANG DUC SON
Trường học	Vietnam National University, Hanoi
Chuyên ngành	Business Administration
Thể loại	Master of Business Administration
Năm xuất bản	2012
Thành phố	Hanoi

Định dạng
Số trang	103
Dung lượng	343,21 KB

Tài liệu tham khảo	Loại	Chi tiết
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11. ThùyVinh(2008),Lànsóngsápnhậpsẽđếnsớmh ơ n dựkiến,TạpchíĐầutưchứngkhoánsố57tháng5năm2008	Khác
12. HoàngThịKhánhT â m (2008),ỨngdụngmôhìnhAPVtrongphântíchhoạtđộngsápnhậpv à mualạicôngt y (M&A)t ạ i ViệtNam	Khác
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