Decree No 39, which took effect in late June, will help finance companies become more “attractive”. They will be able to issue deposit certificates, short- and long-term bonds, treasury bills, provide guarantees, and issue credit cards.

Banks, which are expanding their retail banking market share, are anxious to  buy finance companies.In late June, the State Bank gave the go-ahead to the VP Bank to buy 100 percent of Vinacomin Finance Company’s shares.

Prior to that, at the shareholders’ meeting held in April, the Saigon-Hanoi Bank’s board of directors submitted a plan to buy a finance company.

Meanwhile, some banks takeovers of finance companies were wrapped up many months ago. These included HD Bank purchase of SGVF from the French Société Générale, and the merger of PetroVietnam Finance Company (PVFC) with Western Bank to create PVcomBank.

According to Nguyen Thien Bao, former CEO of PVFC, as soon as becoming a commercial bank, PVcomBank could begin providing many kinds of services to its potential customers, the workers of enterprises that were the subsidiaries of PetroVietnam.

In theory, commercial banks can expand their network by setting up more branches and transaction points. However, it would be less costly and less time consuming to buy operational finance companies to reach the same goal.

Under current laws, banks have to allocate at least VND300 billion to every bank branch and meet a lot of other requirements on staff and facilities to run the branches. Meanwhile, if they buy finance companies, they can take full advantage of the companies’ existing networks and services, especially consumer lending, which is the biggest advantage of companies.

Analysts believe that it is now the right time to buy finance companies because the companies are inexpensive now. Many finance companies, after a period of development, have fallen into decay with high bad debt ratios.