Thailand's Kasikornbank Engages in Discussions for Up to $1 Billion Acquisition of Vietnamese Lender

This potential acquisition comes at a time when Vietnamese banks are grappling with challenges arising from a sluggish economy and disruptions in the real estate sector, leading to an increase in non-performing loans and a series of interest rate reductions. The proposed deal reflects the ongoing trend of consolidation in the Asian financial sector. If realized, KBank's acquisition of Home Credit Vietnam would mark the second-largest M&A transaction in Vietnam's financial industry this year, following the $1.5 billion sale of a stake in Vietnam Prosperity Joint Stock Commercial Bank (VPB.HM) to Japan's Sumitomo Mitsui (8316.T) in March, as per Refinitiv data.

KBank has reportedly engaged financial advisors to explore the feasibility of the acquisition, but final decisions are yet to be made. The acquisition could potentially enhance KBank's ability to offer financial services to small businesses, particularly through its KBank Biz Loan solution for small-scale retail stores.

KBank has officially acknowledged its exploration of a deal with Home Credit in a stock exchange filing, emphasizing its ongoing pursuit of business opportunities in Vietnam. The bank's shares experienced an initial increase of 2.3% on the news, later settling at a 0.8% gain by noon, while the Thai benchmark stock index (.SETI) rose by 0.27%.

Home Credit Group, the Netherlands-based non-bank financial institution of which Home Credit Vietnam is a part, did not provide any comments on the matter. Vietnam, with its rapidly growing working-age population, offers significant growth potential for financial institutions. KBank had recently obtained approval from the Vietnamese central bank to raise its core capital, aiming to become the second-largest foreign bank in the country.

Founded in 2008, Home Credit Vietnam, a subsidiary of Home Credit Group, has expanded its operations to serve 12 million customers through a staff of 6,000 employees. The company specializes in cash and installment loans, including loans for motorcycles and consumer durables, with a network of 9,000 outlets across Vietnam. Home Credit Group is controlled by PPF, the largest investment group in the Czech Republic, founded by the late billionaire Petr Kellner. The group reported a broader loss in the first half of 2022, attributed mainly to the sale of its Russian operations.