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INTRODUCTION
1. Reason to select the topic
Mergers and acquisitions (M&A) came to the world early and
popularly in many developed economics. They are leaded by US's banking
& finance sector followed by Europe, Latin American and finally Asian
countries.
In Vietnam, after nearly 30 years of economic reform, it may seem to
be a time for its economy toward readiness for new economic development
circle (since 2011). Vietnam's financial & banking institutions system has
gained lots of significant achievements for the last years, contributing to its
national economic growth. Yet, these institutions also revealed a few of
shortcomings, such as low charter capital and liquidity, high bad debts,
weak management, human resources below international standards. This
status requires reorganization, restructure of commercial banks, securities
companies and insurance company in particular.
The M&A brings more benefits for not financial institutions but the
general economy. Yet, the M&A has really developed in Vietnam for the
last 7 years, so it seems new practically and theoretically. Several recent
researches just dealt with certain respects, contents but focused on deep,
systematical studies for the entire finance and banking in Vietnamese
market. Therefore, the writer chose the topic "Develop mergers and
acquisitions in finance & banking industry in Vietnam" for my doctoral
thesis.
2. Research objectives and questions
- General research objectives: To propose feasible solutions and
recommendations to develop the mergers and acquisitions in Vietnam
finance & banking sector.
- Specific objectives:


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 The thesis writer conducted a questionnaire survey to find
relationship between the enterprise's business and the M&A
development in the finance and banking sector.
 The writer made full use of Probit model (Quantitative regression)
to evaluate and prove the M&A's positive impacts on the financial
institution's operating results.
 The writer evaluated the M&A and its development in Vietnam's
finance and banking in period of 2007-2013. From that, proposals
and recommendations were given to the M&A development in
Vietnam's finance and banking till 2020.
5. Thesis outline
Besides preamble, conclusion, table of contents, lists, the Thesis is
outlined with 4 chapters:
Chapter 1: Overview of research works and research methodology of
the thesis
Chapter 2: Theoretical basis of the mergers and acquisitions in the
finance and banking sector
Chapter 3: Real state of the mergers and acquisitions in Vietnam
finance and banking sector
Chapter 4: Several proposals and recommendations to the M&A
development in Vietnam finance and banking sector till 2020.
CHAPTER 1
OVERVIEW OF RESEARCH WORKS AND RESEARCH
METHODOLOGY OF THE THESIS
1.1 Research works in Vietnam
Recently, some Vietnamese researchers have been studying mergers
and acquisitions at home. Nevertheless, number of these researchers is

The M&A is relative universal in the world, especially the financial
transactions. Eighteen foreign works were studied, typically as follows:

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Stevens, K.L., (1973), "Financial Factors in Mergers and Acquisitions"
represented quantitative analysis of some financial factors in decision of
mergers and acquisitions in model of seven independent variables that are
(1) Growth rate of the enterprise, (2) Capital scale, (3) Profit, (4) Financial
lever, (5) Dividend policies, (6) Stock liquidity, (7) Scale of stock market.
By such model, the writer is sure that profit and capital scale have the
greatest influence on M&A of the enterprise.
Neter, J and Wasserman (1974), "Applied Liner Statistical Models in
banking and finance mergers" represented the probability model in banking
and finance mergers and acquisitions on basis of evaluation on independent
financial variables that may affect the financial institution's probability of
M&A.
Neely Walter (1987), "Banking acquisitions: Acquirer and Target
Shareholder Return" affirmed that banks needed growth in business cycle
to maintain and expand their market share, to generate economic advantage
and to bring about earnings to the shareholders. During such progress,
mergers and acquisitions reserve roles to help the enterprise grow faster
than its competitors and limit its unability to generate income to their
shareholders or to declare itself bankrupt.
Robert G. Eccles and Thomas C. Willson (2005, "Valuation Security
Analysis for Investment and Corporate Finance" mentioned corporate
valuation, including sharing-value gained by the enterprise from mergers
and acquisitions. This work counted and indicated basis of sharing value of
an M&A transaction or by calculating the sharing value obtained by the
enterprise from the M&A.

CHAPTER 2: THEORETICAL BASIS OF THE MERGERS AND
ACQUISITIONS IN THE FINANCE AND BANKING SECTOR
2.1 Overview of finance and banking
2.1.1 Finance and banking

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The finance and banking are deemed as a capital circulation system
which is integral to the economy, with main activities such as money,
credit, payment, funding
2.1.2 Intermediate financial institutions
Commercial bank is an intermediate financial institution which receives
deposits and then using them for lending, discount and others
Securities Companies is one of intermediate financial institutions which
specialize in securities operations.
Insurance company is an entity in charge of payment, disbursement of a
claim for risks, damages of the object insured.
2.2. Mergers and acquisitions in the finance and banking
2.2.1 Concept of mergers and acquisitions
Mergers mean two or more enterprises reaching an agreement to share
their assets, market, and brand in order to establish a new enterprise with
new name and to put an end to existence of former enterprises.
Acquisitions refer to a fact that an enterprise buys up or takes over
another enterprise but not forming a new entity.
Common points of mergers and acquisitions are to create a new
enterprise with much higher value than each initial single enterprise.
2.2.2 Mergers and acquisitions form
There are many bases to sort the mergers and acquisitions forms, for
example, concerned subjects, purpose of the transaction, financial term,
nature and territorial scope.

national economy and finance.
For the enterprise, the M&A seems a foundation for the enterprise's
market enlargement, marketing cost saving, full use of high-quality human
resources, accumulation of financial funding, raising competitive capacity,
absorption of technical transfer, control level and realization of value chain
switching strategy.

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2.3.3 Evaluation criteria for M&A development in the finance and
banking
Quantity and value of the transaction: The quantity and value are
considered relatively or absolutely. If the data are calculated and showed
that subsequent period's data are higher than the previous one, this means
that the M&A is developing. Conversely, if absolute and relative growth
criteria of the M&A in this period are lower than the previous one, this
means that drop in quality of transactions is indicated by comparing the two
periods.
Transaction quality: this criterion is represented by the sharing value
which the companies want from the M&A. It can be seen via the
enterprise's financial position by comparing before and after the M&A.
2.4 Factors affect the M&A in finance and banking
2.4.1 External factors: institutional environment, economic environment,
socio-cultural environment, engineering environment, technology in the
finance and banking.
2.4.2 Internal factors: financial position, competitive capacity and risk
control.
CHAPTER 3
REAL STATE OF THE MERGERS AND ACQUISITIONS IN
VIETNAM FINANCE AND BANKING SECTOR

billion VND. However, Vietnam's finance and banking were faced with
many difficulties in the last period, such as poor operating results, low
liquidity, poor quality of assets and high credit risks.
3.2 Real state of M&A in the finance and banking of Vietnam.
* Before 1997
In this period, M&A transactions began to appear in Vietnam's finance.
Implementation method was not from the parties' desires but from

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compulsory decision by the Government's agencies to solve the credit
organizations' difficulties at that time.
* From 1997 to 2005
This period was a beginning of M&A in Vietnam's finance and banking
in spite of restrictive quantity. The popular method was that financial
institutions purchased small banks. After pricing, value negotiation, under
instruction of competent agencies, the purchased entity became a part of
purchasing entity. M&A in this period was characterized by compulsory
decision of the competent agencies for purpose of helping the enterprises
overcome difficulties but resulting from competition among entities.
*From 2005 to 2007
In the period 2005-2007, Vietnam began to enact legal regulations on
M&A so application of such documents had not been clever. M&A
transactions were performed by different procedures. Corporate pricing was
just based on traditional value without specific standards or guidance from
the competent agencies.
* From 2007 to present
This is a period of ups and downs in Vietnam's economy and finance &
banking. Yet, this is also a chance for potential M&A development.
Together with enaction of Investment Law 2005, Enterprise Law 2005,

accelerated in period of 2007-2013. In 2007, the value was 482 million
USD but it dropped down in 2008, 2009, 2010 due to impacts from global
financial crisis. However, by 2011, M&A value reached to the highest at
3.2 billion USD with 18 transactions. Compared with previous years, in
2009 there were 44 transactions worth 303 million USD while in 2011,
there were 18 transactions worth 3.2 billion USD and in 2012, with only 5
transactions, and the financial scale amounted to 1.3 billion USD. In 2013,
number of finance M&A transactions was 10 amounting to 683 million
USD, which is less than the year 2012 because M&A among domestic

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financial institutions was for re-structure and there was no great transaction
of share as in the year 2012.
Source: Asia Venture Capital Journal, PWC Asia Financial Services M&A Report SoxPlus Vietnam, Capital IQ
Chart 3.1: M&A transactions in Vietnam finance and banking sector
from 2007 to 2013
Increasing in quantity and value of M&A transactions in the finance and
banking comes from the better signals of the financial market when the
restructuring work is concentrated. Additionally, legal documentation
system and market opening policy for the foreigner investor are clearer.

0.0010; 0.0048; 0.0047; 0.0094; 0.0091; 0.0074 respectively. This model's
variables are entirely significant to explain development of M&A
transactions in the finance and banking of Vietnam.
3.3.3 General conclusion about M&A development in Vietnam's finance
and banking
Achievements
* Macro aspect: M&A is a tool having positive contributions to
restructure of Vietnam's finance and banking system in recent time,
partially heightening competitive capacity of Vietnam's financial market,
attracting the foreign capital sources, boosting up the securities market and
contributing to finalization of legal corridor.
* Micro aspect: M&A creates opportunities for the entities to raise their
operating efficiency, to help small entities not declare bankrupt, to raise

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capital safety ratio, to enhance competitive capacity, to enlarge scale, to
raise position, to enlarge network and base of customers.
Limits and cause
* Macro aspect: legal framework for M&A is deficient; regulations on
ownership rate for the foreign investors are restricted; and quality of human
resources is weak.
* Micro aspect: M&A methods are unprofessional, with no standard
procedures, difficulties in pricing, lack of M&A personnel, limited M&A
knowledge, dubious information and lack of intermediate consultants.
CHAPTER 4. SEVERAL PROPOSALS AND
RECOMMENDATIONS TO THE M&A DEVELOPMENT IN
VIETNAM FINANCE AND BANKING SECTOR TILL 2020
4.1 Prospect of M&A development in Vietnam's finance and banking
 Global economic crisis gives an opportunity for M&A

the foreign investors in the financial institutions
The Government should consider loosening banking room up to 49%
and adjusting "room" once per 2, 3 years, according to the routine. Time by
time, ownership ratio shall be raised to 51%, 75% and completely open in
2020. For securities companies and insurance companies, it should be also
considered the foreign investors' ownership of 49%, even of 100% of
charter capital. Each case must obtain approval from Ministry of Finance.
Disseminate M&A knowledge and encourage the entities to implement
M&A actively in various manners.
The competent agencies should be active to disseminate M&A
knowledge in order to raise the financial subjects' awareness and to create
favourable conditions for the entities to perform the M&A transactions in
various manners.
Enact the standard procedures for M&A transactions in Vietnam

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The thesis suggests a standard M&A procedure of 8 steps and supporting
solutions for this suggestion. (1) Build specific strategies, targets for the
M&A transaction; (2) Specify type of company for the M&A; (3) Learn
about legal affairs related to the enterprise; (4) Assess matters about
corporate finance; (5) Determine mode of M&A transaction; (6) Price,
evaluate the enterprise; (7) Negotiate and sign the M&A contract; (8) Solve
after-merger problems.
Promulgate specific instructions and guidance on merger and
acquisition
Collected financial data should be carefully reviewed and assessed in
combination with various pricing methods in order to evaluate the
enterprise and to quantify inputs on basis of reasonable adjustments.
Promulgate compulsory regulations on transparency and disclosure of

It is essential to identify type of M&A transaction correctly which the
entity expects to implement; to employ the consultants to support the legal
and financial inspection; to employ the consultants to prepare and draft
provisions of the M&A contract adequately.
Raise the enterprise's personnel qualification
The financial institutions should have a plan for personnel training at
home and abroad in respect to the M&A. Such training should be offered
and executed at all levels from key leaders, managers to operating staff.
4.2.3 Recommendations to the competent agencies
Common recommendations
Some common recommendations to the competent agencies: (1) close
cooperation between the competent agencies in order to raise the financial
institutions' competitive capacity; (2) Better and amend the legal
framework for M&A properly fitting for Vietnam's commitments about
finance liberalization; (3) Build a plan to disseminate the laws on banking
and finance in period of integration; (4) Take interest in financial

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information disclosure with specific regulations; (5) Enhance the
Government's supervision on the financial institution's activities; (6)
Encourage the institutions to be more active in mergers and acquisitions
with tax preference, reduction in compulsory reserve ratio.
Specific recommendations
* To the Government: enhance awareness of M&A role in the finance
and banking; promulgate specific legal documents for M&A; build
Vietnam's M&A development strategy till 2020 and vision to 2030; set up
an M&A commission; standardize the financial accounting criteria;
consider M&A as a prior financial solution in re-organization of the
enterprises; provide explicit guidance on pricing method, valuation of the

foreign direct and indirect investments as well as active integration of
Vietnamese economy to the world economy. The M&A becomes familiar
to the corporate community and the society, especially, to the financial and
banking enterprises. Besides explicit benefits such as scale enlargement,
improvement of competitive capacity, market expansion many
Vietnamese enterprises evenly regard the M&A as a solution to recover the
investment capital with high profit, prevention from business risks and
hazards in the business environment.
Facing with global economic depression at present, Vietnam is not
exceptional for common difficulties of the region and the world. Many
companies, especially small and medium scale companies, are working
perfunctorily or they cannot but to declare bankrupt, dissolution or to be
merged into another company. With common difficulties of the nation,
Vietnam's finance and banking system is not out of such spiral. The
financial foundation is shaky because the enterprises are facing with
extremely difficult period of the economy, settling lots of problems such as

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bad assets quality, difficulty in liquidity, low profit quality, weak
management and risk control. As a result, restructuring the finance sector
becomes essential to protect the institutions from falling into insolvency,
exhausted equity, and from that to recover their operating activities, to have
foundation to enable the economy to overcome the crisis. The M&A is
considered as a financial instrument necessary for the finance and banking
restructure and the entire financial system of Vietnam toward sustainable
and stable development of the national finance in background of
integration.
With benefits and opportunities from the M&A instrument for the
economy in general and the finance and banking companies in particular,

the finance and banking in Vietnam; to consult the experts about potential
development of finance and banking M&A in Vietnam in coming time.
Nevertheless, the thesis cannot avoid all the shortcomings. The writer
highly appreciates valuable comments, ideas of teachers, scientists,
researchers and readers for better quality of thesis.