By Dr Arno Maierbrugger
investvine.com
There is remarkable activity going on in Southeast Asia with regard to mergers and acquisitions in the banking sector. Southeast Asia bank acquisitions are set for a record year of volumes with more than $20bn worth of deals in the pipeline in 2013, and buyers from Qatar to Japan expected to be interested in a piece of the region’s financial institutions.
The latest example was the QNB’s interest in Dutch Rabobank’s Indonesian operations. According to media reports, QNB is said to be among the bidders to buy Rabobank’s Indonesian unit in a $400mn deal, competing with other bidder such as the Commonwealth Bank of Australia and the Industrial and Commercial Bank of China. This is a strong line-up and shows the rising interest of foreign banks to cash in on Southeast Asia’s growing demand for financial services, especially in Indonesia, a country of 240mn people of which approximately around 80% of people in the working age don’t have bank accounts, let alone private insurance, access to loans or credit cards.
In Cambodia, the ratio is even at 90%, in Thailand or Malaysia still at 40% of people without access to banking services, a study by the US Agency for International Development has found. Other current M&A targets in Indonesia include Bank Tabungan Pensiunan Nasional, a financial institution focused on micro finance with $3.2bn market value.
Vietnam and Thailand are also on the radar this year for more bank deals. In Vietnam, shares of banks are now cheap as the sector is struggling with a high debt burden and non-performing loans from state-related entities. Japanese investors are already hunting for Vietnamese banks’ shares, in particular for Vietnam’s Sacombank, and, reportedly, sovereign wealth funds from the Gulf are also looking around what’s on offer.
In Thailand, General Electric is in the process of selling its remaining 25.3% stake in the country’s fifth largest lender, Bank of Ayudhya, which could trigger a bid for the entire bank, valued at $6.6bn.
Not only the low penetration of bank accounts in the 600mn-people region of Asean is a favourable prerequisite for foreign takeovers, it is also the rising demand for wealth management and related services such as securities services, brokerage and asset management. Swiss banking group Julius Baer has said that the region is expected to boast nearly half a million millionaires by 2015 with investible wealth of $2.2tn.
And, equally important, is the fact that the growing Islamic banking sector in the Asean region is in need for new strategies especially in the field of liquidity management, where Gulf banks could lend their expertise.
Malaysia, being an unchallenged global leader in Islamic banking and finance, is well positioned to develop a new model of Islamic banking, which can be supported by the experience and financial power of Gulf banks either through mergers or new partnerships, bringing the practice of Islamic banks closer to the real economic transactions and enhance their influence on the global financial market.
*Our columnist Dr Arno Maierbrugger is Editor-in-Chief of www.investvine.com, a news portal owned by Inside Investor focusing on Southeast Asian economic topics as well as trade and investment relations between Asean and the GCC. The views expressed are his own.
http://investvine.com/
