By Phuong Nguyen and Yantoultra Ngui
HANOI/SINGAPORE (Reuters) -Thailand's second-biggest lender Kasikornbank is in talks to buy consumer finance provider Home Credit Vietnam in a deal worth up to $1 billion that would further its push to expand in Vietnam, two sources said.
The Bangkok-based lender, also called KBank, hopes to become one of Vietnam's top 20 banks in terms of assets by 2027. It has total assets worth $119.7 billion, second only to Bangkok Bank in Thailand, Refinitiv data showed.
The news comes at a time when Vietnamese banks are under pressure as a slowing economy and protracted turmoil in the real estate sector have stoked an uptick in bad loans and triggered broad interest rate cuts.
A potential deal would underscore a trend of consolidation in Asia's finance sector and make KBank's M&A transaction the second largest in Vietnam's financial industry this year after the sale of a $1.5 billion stake in Vietnam Prosperity Joint Stock Commercial Bank to Japan's Sumitomo Mitsui (NYSE:SMFG) in March, according to Refinitiv data.
KBank has talked to financial advisors to explore the potential acquisition, according to the two sources, although deliberations are ongoing and no final decision has been made.
"KBank is currently operating KBank Biz Loan solution, a credit service for small-scale retail stores. The potential deal with Home Credit will enable the bank to promote access to financial services for small business clients," said one of the sources familiar with the matter.
The sources declined to be named as the matter is private.
KBank confirmed it was exploring a deal with Home Credit in a stock exchange filing on Wednesday. It said it continuously seeks various business opportunities in Vietnam which may or may not result in a transaction, adding that it will disclose information if any transaction does occur.
Shares of KBank rose as much as 2.3% early on Wednesday, later shedding some gains and up 0.8% at noon, while the Thai benchmark stock index was trading 0.27% higher.
Home Credit Group did not respond to Reuters' requests for comment.
Vietnam, home to more than 100 million people, has a fast-growing working-age population where KBank estimated that over 69% of people have no bank account, the highest in Asia.
In June, the Thai lender obtained the Vietnamese central bank's approval to raise core capital for its business in the country to $285 million from $80 million, to become the second-biggest foreign bank.
It had set a target of $400 million in net income, with outstanding loans of 180 billion baht ($5.13 billion) and customer base of 8.4 million in the country within 2027.
Home Credit Vietnam, part of Netherlands-headquartered non-bank financial institution Home Credit Group, started operations in the Southeast Asian country in 2008 and has grown to employ 6,000 staff serving 12 million customers, according to its website.
Besides cash loans, the company offers installment loans to buy motorcycles and consumer durables. It has 9,000 outlets in Vietnam, its website showed.
Home Credit Group is controlled by the Czech Republic's biggest investment group, PPF, which was founded by late billionaire Petr Kellner. It reported a wider loss in the first half of 2022, mainly due to the impact from the sale of Russian operations.
($1 = 35.1200 baht)