Nghiên cứu năng lực tài chính của các ngân hàng thương mại sau ma ở việt nam theo các tiêu chí camels TT TA

--- NGUYEN THI VAN RESEARCH THE FINANCIAL CAPACITY OF COMMERCIAL BANKS AFTER M&A IN VIETNAM BY CAMELS CRITERIA Major: FINANCE - BANKING Code: 9340201 THE SUMMARY OF THE DISSERTATI

-

NGUYEN THI VAN

RESEARCH THE FINANCIAL CAPACITY

OF COMMERCIAL BANKS AFTER M&A

IN VIETNAM BY CAMELS CRITERIA

Major: FINANCE - BANKING

Code: 9340201

THE SUMMARY OF THE DISSERTATION

HA NOI – 2022

NATIONAL ECONOMICS UNIVERSITY

Science instructor: 1 PROF.DR LE DUC LU

2 DR HOANG VIET TRUNG

Reviewer 1 :

Reviewer 2:

Reviewer 3:

The dissertation is protected at the Council of thesis

National Economics University

At:… hours, date …… month …… 2022

The dissertation can be found at:

- National Library

- Library of National Economics University

INTRODUCTION

1 Necessity of research

After implementing the project on restructuring the credit

institution system in phase 1 (2011-2015) and phase 2 (2016-2020),

banking M&A activities in Vietnam as of 2021 still have not been

completed professional, small in number, sometimes spontaneous,

sometimes due to the pressure of mechanisms and regulations in legal

documents, not yet derived from the economic interests of the bank

and the economy economic, thus inexperienced and poorly informed

Moreover, after restructuring, new commercial banks were formed,

which is the result of M&A deals But after a while, how these

commercial banks develop and how effective they are, it is a difficult

problem that bank administrators must continue to solve Therefore,

the question for commercial banks after M&A is how to improve

financial capacity to maintain stability after M&A and the bank to still

operate effectively To answer this management question, it is

necessary to have in-depth research methods and econometric

applications in analyzing and evaluating the financial capacity of

Vietnamese commercial banks after M&A In the world, financial

analysts have used different approaches such as: Dupont, DEA,

CAPM, Probit, Proxy, Logistic to assess a bank's financial ability to

see if it is secure according to the standard Moody's, First, Camels,

Basel or not; in which, assessing financial capacity according to

Camels criteria is the most commonly used Moreover, in recent years,

there have been quite a few studies evaluating the financial capacity of

Vietnamese commercial banks, however, most of these studies

approach the traditional qualitative and quantitative analysis methods

The scope of the study is only limited to analysis for a few

state-owned commercial banks or Vietnamese commercial banks in general, but has not studied commercial banks after M&A implementation For the above reason, the author has chosen the topic "Research on the financial capacity of commercial banks after M&A in Vietnam according to CAMELS criteria" to continue to contribute more in terms of theoretical aspects of the role of financial capacity in

Vietnam's commercial banking system

2 Research purpose

The research objective of the thesis is to evaluate the financial capacity of commercial banks after M&A in Vietnam according to Camels criteria in the past time, thereby offering solutions to improve the financial capacity of commercial banks after M&A in Vietnam in the coming time

3 Object and scope of research

3.1 Object of research: The thesis focuses on studying the

financial capacity of commercial banks after M&A in Vietnam according to Camels criteria

3.2 Scope of research

- About space: M&A activities take place on a wide scale including businesses, companies and credit institutions Within the scope of the thesis, the author only focuses on 8 typical commercial banks that have participated and succeeded in M&A deals in Vietnam, including: SHB, HDBank, SCB, LPB, PVcombank, Sacombank, Maritimebank, BIDV The thesis does not focus on studying M&A deals of other economic organizations

- About time: The data used to implement the thesis was collected over a period of 9 years from 2011-2019 starting from the implementation of M&A deals in 2011, including available data from

financial statements, annual reports of commercial banks after M&A

in Vietnam, reports of the State Bank, reports of the world bank,

reports of the banking supervision system

4 Research Methods

The thesis uses a combination of research methods: methods of

analysis, synthesis, logical thinking; Statistical and comparative

methods; Quantitative research methods

5 New contributions of the thesis

6 The structure of the thesis

In addition to the introduction and conclusions, the thesis is

structured into 4 chapters:

Chapter 1: Research overview and theoretical basis on financial

capacity of commercial banks after M&A

Chapter 2: Status of financial capacity of commercial banks

after M&A in Vietnam according to Camels criteria

Chapter 3: Evaluation of financial capacity of commercial

banks after M&A in Vietnam according to Camels criteria by Logistic

binary regression model

Chapter 4: Solutions to improve financial capacity for

commercial banks after M&A in Vietnam

CHAPTER 1

RESEARCH OVERVIEW AND THEORETICAL BASIS

ON FINANCIAL CAPACITY OF COMMERCIAL

BANKS AFTER M&A 1.1 Research overview

1.1.1 Overview of research works related to the assessment of financial capacity of commercial banks

The topic of financial capacity of commercial banks is a topic that has been studied a lot in the world, in which there have been many research works using the methods Dupont, DEA, Capm, Probit, Logistic to assess the financial capacity of a commercial bank to see

if it meets Camels, Basel, Moody's, and First standards To focus on the research content of the thesis, the author has studied relevant domestic and foreign research works such as: Alli Nathan and Edwin

Neave (1992), R Alton Gilbert et al (2002), Le Thi Huong (2002), Judijanto and Khmaladze (2003), Nguyen Thi Viet Anh (2004), Le Dan (2004), Michelle L Barnesa and Jose A.Lopez (2005), Pham Thanh Binh (2005), Frank Heid (2007), Nguyen Viet Hung (2008), Hoang Van Thang (2009), Podviezko and Ginevičius (2010), John Tatom (2011), Gupta and Aggarwal (2012), Lee et al (2012), Phan Thi Hang Nga (2013)…

1.1.2 Overview of research works related to commercial bank M&A activities

M&A activities of commercial banks have developed widely around the world, but this activity has only grown strongly in Vietnam after the project of restructuring commercial banks in the period 2011

- 2015 and the period 2016 - 2020 of the Government Therefore, the works in the world on this issue are quite rich and diverse, but in

Vietnam so far, it is still limited by research works on M&A

Researches related to commercial bank M&A can be summarized in

different ways as follows: Jonathan M.W & Angel.L (2008), Yener

Altunbaşa and David Marquésb (2008), AnthonyN Rezitis (2008),

Elena.B& Pascal F (2009), Bui Thanh Lam (2009), Ahmad Ismail

(2010), Andrea B & Giovanna.P (2012), Ioannis A& Panayiotis P.A

(2013), Phan Dien Vy (2013), Nguyen Thi Dieu Chi (2014), Nguyen

Quang Minh (2015)…

1.2 Theoretical basis of commercial banks after M&A

1.2.1 Overview of M&A in banking activities

1.2.1.1 The concept of M&A

1.2.1.2 M&A classification

1.2.2 Commercial bank after M&A

1.2.2.1 The concept of commercial bank M&A

Merger and Acquisition (M&A) of a commercial bank is an

activity in which a combination or acquisition of two or more

commercial banks takes place through the transfer of part or all of its

assets, rights and interests, obligations and legitimate interests of the

participating commercial banks in order to achieve the goals of each

bank, and at the same time create new values for the commercial bank

after conducting the M&A

1.2.2.2 The benefits and limitations of commercial bank M&A

1.2.2.3 Methods of carrying out M&A of commercial banks

Voluntary negotiation, collection of shares on the stock market,

tender offers, property purchases, enticing disgruntled shareholders

1.2.2.4 The concept of commercial banking after M&A

Commercial bank after M&A is a commercial bank formed right

after banking M&A activities take place Therefore, a commercial

bank after the M&A is a specially formed commercial bank - the main result of the banking M&A deal Through that, a commercial bank after M&A has both the characteristics of a commercial bank in general and the characteristics of M&A activities in particular

1.3 Theoretical basis of financial capacity of commercial banks after M&A

1.3.1 The concept of financial capacity of commercial banks after M&A

The financial capacity of commercial banks after M&A is the financial ability for the bank to generate stable profits and achieve higher profit rates than before, higher than the average of the banking industry; for the Bank to conduct and develop business operations safely and effectively, and at the same time affirm its position in the market

1.3.2 Contents of financial capacity of commercial banks

- Financial capacity of commercial banks represents the ability

of commercial banks to create capital

- Financial capacity of commercial banks is also reflected in the ability to "use capital" of commercial banks

- Financial capacity shows the ability of commercial banks to realize profit goals in business

- The financial capacity of commercial banks also includes the financial safety of the commercial banking system

1.3.3 Assessing the financial capacity of commercial banks after M&A according to CAMELS criteria

1.3.3.1 Capital Adequacy: Size of Equity, Minimum Capital Adequacy Ratio (CAR), Equity/Total Assets Ratio, Financial Leverage, Internal Capital Generation Ratio, Reserve Capital Ratio

1.3.3.2 Asset Quality: Loan balance/total assets, NPL ratio,

Provision expense ratio, Investment ratio Fixed assets,

Non-performing loan recovery capacity (NPLs), Provision ratio

1.3.3.3 Management: Earnings growth, Credit growth, Net

operating profit per employee

1.3.3.4 Earnings: Return on Assets (ROA), Return on Equity

(ROE), Net Interest Margin (NIM), Non Net Interest Margin (NNIM)

1.3.3.5 Liquidity: Deposit/Total Assets, Total Debt/Deposit, Asset

Liquidity Ratio, Deposit Coverage Ratio, Short-Term Liquidity Ratio

1.3.3.6 Sensitivity to market risk (S - Sensitivity)

1.3.4 Factors affecting the financial capacity of commercial

banks after M&A

1.3.4.1.Objectivefactors:Legalenvironment, socio-political

environment, financial market, factors of economic environment

1.3.4.2 Subjective factors: size of equity, management capacity of

bank administrators, size and quality of assets, bank profitability, liquidity

1.4 Experience in improving financial capacity of some

commercial banks in the world and lessons learned for

commercial banks in Vietnam

1.4.1 Experience in improving financial capacity of some

commercial banks in the world: Experience from the US, experience

from China, experience from Thailand, experience from Korea,

experience from Japan

1.4.2 Lessons for Vietnamese commercial banks

CHAPTER 2

THE STATUS OF THE FINANCIAL CAPACITY OF THE COMMERCIAL BANKS AFTER M&A IN VIETNAM

FOLLOWING THE CAMELS CRITERIAS 2.1 Overview of M&A situation of Vietnamese commercial banks

2.1.1 M&A situation of Vietnamese commercial banks in the period of banking restructuring after the Asian financial crisis (1997-2003)

2.1.2 M&A situation of Vietnamese commercial banks in the period when Vietnam joined the World Trade Organization (2004-2010): Mutual share purchase and sale deals of domestic commercial joint stock banks; Domestic joint stock commercial banks sell shares to foreign banks

2.1.3 M&A situation of Vietnamese commercial banks in the restructuring period of the banking system (2011-2015): Share deals, mergers, consolidation deals, acquisitions

2.1.4 M&A situation of commercial banks in phase 2 of restructuring the banking system (2016-2020)

2.2 Status of financial capacity of commercial banks after M&A in Vietnam according to CAMELS criteria

Table 2.8 List of Banks after M&A used for analysis

Joint Stock Bank

2013

and Development of Vietnam

2015

2.2.1 Capital Adequacy

2.2.1.1 Scale of equity: The scale of equity of commercial banks

after M&A in Vietnam tends to increase gradually over the years but

the growth rate is not high Among banks, BIDV and HDBank have

the strongest equity growth Compared with Camels criterion, among

the commercial banks after M&A in Vietnam, there are 2 banks,

Sacombank and BIDV, whose equity capital has reached the standard

> 20,000 billion, the rest are not achieved, even Even LPB, HDBank,

and PVcombank have less than 50% of the standard

2.2.1.2 The financial leverage ratio: The financial leverage ratio

of most commercial banks after M&A in Vietnam tends to increase,

showing that banks are asserting their credit expansion goals Among

the commercial banks after the M&A, HDBank and PVcombank are

the two banks after the M&A with a financial leverage ratio that is relatively consistent with Camels' criteria This shows that these banks have effectively used the financial leverage ratio, thereby increasing the operational efficiency and safety of the bank The financial leverage ratio is too high, indicating that the bank has not used this ratio effectively, which will lead to the risk of the bank's insolvency leading to bank bankruptcy Meanwhile, Maritimebank has a much smaller leverage ratio than Camels criterion with a leverage factor of 6.7 times in 2015, 5.8 times in 2016 and 7.2 times better in 2017 In 2018, 2019 this coefficient is 16.17 times and 15.06 times higher than Camels' regulatory framework and this shows that Maritimebank has not effectively used the financial leverage coefficient and the bank's operational efficiency will not be optimal BIDV had a fairly high financial leverage ratio in

2015-2017 after M&A, exceeding Camels' regulatory framework, but this ratio fell below the regulated level of 8.97 times and 9.56 times in

2018 and 2019

2.2.1.3 Equity/Total Assets Ratio: The ratio of equity/total assets of commercial banks after M&A in Vietnam is larger than the American AIA's Camels criterion (≥ 4% - 6%) In which, HDBank, PVcombank, LPB, Maritimebank are banks with high equity/total assets ratio, especially Maritimebank This shows that banks maintain enough capital, the amount of additional capital from business results is increasing, proving that banks are operating more effectively and safely

2.2.1.4 Minimum capital adequacy ratio (CAR): Vietnamese commercial banks after M&A have CARs all over 9%, exceeding Camels' capital adequacy standards, of which Maritimebank is the

bank with the highest CAR at 24.53% in 2015 and by 2016 The bank

has adjusted this coefficient to be 14.6%, in 2017 it was 19.97%

However, the minimum capital adequacy ratio is at 9%, but if it is too

high, the capital efficiency is not high Particularly for 2019, banks

that meet Basel 2 standards with the minimum capital adequacy ratio

according to Circular 41 must have a CAR> 8%, according to this

standard it is difficult for banks to achieve this ratio more secure

because the risk is calculated according to 3 pillars including

operational risk and market risk, but BIDV, LPB, HDBank all meet

the requirements

2.2.2 Assets quality

2.2.2.1 Loan balance/total assets: The ratio of outstanding loans

to total assets of commercial banks after M&A in Vietnam tends to

increase, except for Sacombank and SCB Loan balance tends to

increase, which is consistent with the current stage of economic

development Compared with American AIA's Camels criterion, the

ratio of outstanding loans to total assets is 60% and looking at the data

table on the ratio of outstanding loans to assets of Vietnamese

commercial banks after M&A shows that the majority have the

loan-to-asset ratio is within the safety standard framework of Camels,

except for SHB and Sacombank, Lienvietpostbank in 2018, 2019;

SHB for the period 2014-2019; Sacombank; BIDV in the period

2015-2019 however this indicator is still acceptable and while

Maritimebank has this ratio as low as 40%

2.2.2.2 Bad debt ratio

Banks have good credit risk management, and bad debt ratios are

well controlled The bad debt ratio of banks tends to decrease

gradually, higher in the early years after M&A Among the banks studied after the M&A, LPB, HDBank, and BIDV are the banks with the bad debt ratio since the M&A implementation is less than 3% according to the regulations of the State Bank of Vietnam, but compared to Camels criteria only in 2015 was 0.88% < 1% qualified SCB, SHB, Pvcombank, Sacombank, Maritimebank had a high bad debt ratio in the early years after having just implemented M&A with

a bad rate of > 3%, which was not guaranteed according to the regulations of the State Bank of Vietnam and this ratio has been approved controlled and gradually decreased after one or two years after M&A implementation However, this ratio is satisfactory according to the regulations of the State Bank of Vietnam, but according to Camels criteria, it is not up to the standard

2.2.2.3 Provision expense ratio

In the years of operation after the M&A, only PVcombank and Sacombank have acceptable provision expense ratios according to Camel criteria, but in contrast, BIDV's provision expense ratios are smaller than Camels criteria (1.5%) ) As for other banks, the ratio of provision expenses over the years after M&A has fluctuated larger or smaller than Camels' safety framework

2.2.3 Management

2.2.3.1 Income growth rate Profit after tax of commercial banks after M&A in Vietnam fluctuated, there were differences between banks, and profit after tax increased more strongly in 2019 with the exception of SCB Among the banks performing M&A, BIDV and HDBank have gradually increased profits since the M&A date up to now and have met Camels'

standards Lienvietpostbank, SCB, SHB are banks that carry out M&A

at a time when Vietnam's economy is facing difficulties, rising

inflation affects the bank's operating results, so the profits of these

banks have decreased sharply from 2011, 2012 to 2015 and then

gradually increased

2.2.3.2 Credit growth rate: In the period 2017-2019, commercial

banks after M&A, the loan balance of commercial banks after M&A

has increased gradually over the years The bank with the highest

credit balance is BIDV, followed by SCB, Sacombank In 2017, the

bank with the highest credit growth rate was HDBank at 27.1%,

followed by SHB at 22.1% and finally Maritimebank at 4.5% In

2018, banks with high credit growth were SCB and BIDV with credit

growth rates of 13.28% respectively; 18.49% and by 2019 BIDV and

SHB have stronger growth rates

2.2.4 Earnings

2.2.4.1 Return on assets (ROA)

Commercial banks after M&A have quite low ROA, compared

to Camels criteria, only LPB in 2011 and 2012 reached 2.14% and

1.42%; BIDV in 2015 was 1.0%; HDBank from 2017 to 2019 has

ROA > 1%, meeting Camels criteria This proves that the management

capacity of the managers of the banks after the M&A is not good, the

conversion of assets into net profit is not good and effective

2.2.4.2 Return on equity (ROE)

According to Camels criterion of return on equity (ROE) ≥

15%, according to this standard, commercial banks after M&A, only

BIDV in 2015 was 15.5% and HDBank in 2017-2019 has a ROE of

15.8%, 20.3%, 21.6%; Lienvietpostbank in 2018 is 15.4%, meeting

Camel criteria, while other banks have not, this ratio is low Banks with the lowest ROE ratio are SCB and PVcombank (<1%) This shows that the management capacity of commercial banks after M&A

is not good, the efficiency of using capital of banks for investment and lending is not effective

2.2.4.3 Net Interest Margin (NIM) Only SHB had a NIM in 2017 of 7.01%; LPB has a NIM in

2017 of 7.54%, meeting the Camels criterion of AIA America; the rest

of the other banks are lower than the Camels criterion, even below 1% like PVcombank in 2015-2017 NIM respectively 0.84%, 0.33%, 0.96%; SCB in 2016 and 2017 had NIM of 0.87% and 0.47% This proves that the management capacity of the banks is not good, the use

of assets is not effective

2.2.4.4 Non Net Interest Margin (NNIM) According to the Camels criteria of AIA America, commercial banks after M&A only met the standards with NNIM of 1.5% in 2014 and Maritimebank with NNIM of 1.58% and 1.6% in 2016 and 2017

2.2.5 Liquidity

2.2.5.1 Ratio of total deposits/total assets According to Camels criteria of AIA America, the deposit/total assets ratio is recommended at ≥ 75% The ratio of total deposits to total assets of commercial banks after M&A differs between banks and fluctuates, and among the studied M&A banks, only Sacombank has this ratio > 75% reaching Camels criteria since M&A

2.2.5.2 Loan balance/total deposit ratio According to Camels criterion, the loan/deposit ratio is required

at ≤ 80% and according to this standard, banks that exceed the bracket

are SCB in 2011 and 2012; SHB in 2016 and 2017; BIDV in

2015-2019; HDBank, SHB, Lienvietpostbank in 2018 and 2019 Among

banks with outstanding loan/deposit ratio in the Camels bracket,

Maritimebank and PVcombank have this ratio much lower than the

standard This ratio is too large and too small, which is not good for

the bank's operations

2.3 Comment on financial capacity of commercial banks

after M&A in Vietnam according to Camels criterias

2.3.1 These achievements

2.3.2 Limitations

2.3.3 The cause of limitations

CHAPTER 3

ASSESSMENT OF THE FINANCIAL CAPACITY

OF THE COMMERCIAL BANKS AFTER M&A IN VIETNAM ACCORDING TO CAMELS CRITERIAS

BY LOGISTIC BINARY MODEL 3.1 Evaluation methods

3.1.1 Overview of the binary logistic regression model 3.1.2 Dependent variable: To predict the probability that

commercial banks after M&A will meet international standards according to Camels criteria or not, call the dependent variable y = NLTC (Financial capacity):NLTC = 1 if the bank meets international standards according to Camels criteria NLTC = 0 if the bank does not meet international standards according to Camels criteria

3.1.3 Independent variables: Independent variables (X1-15) are

those based on which to predict whether a bank meets international standards according to Camels criteria, including: equity size; Leverage factor; equity/asset ratio; minimum capital adequacy ratio; Loan balance/total assets; Bad debt ratio; Provision expense ratio; Profit growth rate; Credit growth rate; ROA; ROE; NIM; NNIM; Deposit/Total Assets ratio; Loan/Deposit ratio

3.2 Analyzing the results

3.2.1 Characteristics of data analysis

Table 3.2 Characteristics of data analysis

Selected Cases Included in Analysis 47 100.0

Missing Cases 0 0.00

Source: Author's data analysis results

Table 3.2 shows the data characteristics included in the Logistic

binary regression analysis of this study, including 47 observations,

none of which were missing data, none of which were unselected

3.2.2 Result of data analysis

The logistic regression results show that the variables

QuymoVCSH, CAR, Noxau, ROA, ROE, Hesodonbay, VCHTS,

TyleDP, NNIM have an impact on financial capacity according to

Camels criteria Column B in the table above is the impact coefficient

of the independent variables, showing the impact of the independent

variable on the dependent variable From the results in the table

above, we have the following Logistic regression equation:

log(Odds) = 22.296 + 0.005 QuymoVCSH+

0.227CAR-2.447Noxau + 25.517ROA + 1.678ROE -1.411Hesodonbay - 5.796

VCSHTS + 5.512 TyleDP + 6.357 NNIM

Looking at the Logistic regression equation, the significance of

the Logistic regression coefficients can be interpreted as follows:

Equity size (QuymoVCSH), CAR, ROA, ROE, Provision ratio

(TyleDP), NNIM have a positive impact on financial strength meeting

(Hesodonbay), Equity ratio (VCSHTS) have a negative impact on

financial capacity meeting international standards according to

Camels criteria

Table 3.8 Summary table of individual regression

coefficients of each variable

X1: Equity size QuymoVCSH 0.005 0.044

X2: Financial leverage ratio Hesodonbay -1.411 0.008

X3: Equity/Total Assets ratio VCSHTS -5.796 0.009

X4: Minimum capital adequacy

0.078

X5: Loan balance/total assets Tyledunotaisan No impact 0.468

X6: Bad debt ratio Noxau -2.447 0.031

X7: Provision expense ratio TyleDP 5.512 0.075

X8: Profit growth rate Tangtruongloinhuan No impact 0.965

X9: Credit growth rate Tangtruongtindung No impact 0.357

X10: Return on Assets (ROA) ROA 25.517 0.036

X11: Return on Equity (ROE) ROE 1.678 0.065

X12: Net Interest Margin (NIM) NIM No impact 0.480

X13: Non Net Interest Margin (NNIM) NNIM 6.357 0.057

X14: Deposit/total assets ratio Tyletgtaisan No impact 0.211

X15: Loan/deposit ratio Tyledunotiengui No impact 0.477

Source: Synthesis of Logistic regression results on SPSS25.0 software

Through an overview of the theoretical basis of the financial capacity of commercial banks, the author summarizes and provides 15 independent variables (15 indicators) that affect the dependent variable which is the financial capacity of commercial banks after