SET-listed Bank of Ayudhya (BAY) has put off exploring business opportunities in Vietnam after facing several hurdles, particularly the high costs of mergers and acquisitions (M&A).
The bank decided to slow down expansion in Vietnam because the regulations, licensing, human resources and business platform all pose constraints, said Thakorn Piyaphan, head of Krungsri Consumer Group, BAY's unsecured loan unit.
With a limited number of consumer finance licences in Vietnam, acquisition costs for the business are relatively high, he said.
BAY, Thailand's fifth-largest lender by assets, was in talks during a two-year search in Vietnam for consumer finance business opportunities.
"Vietnam is not our priority for business expansion in the region," Mr Thakorn said. "In addition to a licence, we want support and collaboration from a local partner to sustain the business."
The bank continues to strengthen its foothold in Cambodia, Laos and Myanmar by focusing on auto finance, unsecured loans and financial platforms.
Thakorn: Vietnam no longer a priority
BAY's expansion is in line with parent Bank of Tokyo Mitsubishi UFJ's (BTMU's) policy to deepen the group's reach in Southeast Asia to serve Japanese clients shifting their manufacturing base to the region.
The bank has a footing in Cambodia, Laos and Myanmar through its overseas branch and consumer finance networks. In January 2017 it acquired the entire stake in Hattha Kaksekar Ltd (HKL), Cambodia's fourth-largest microfinance lender.
In Laos, BAY has two branches (Vientiane and Savannakhet) and Krungsri Leasing Services offers personal and auto loans.
BAY also has a representative office in Myanmar. For Vietnam, BTMU holds a sizeable stake in VietinBank.
Mr Thakorn said business opportunities in Cambodia have widened through HKL, with business coverage now extended to deposits, fund transfers and fintech from microfinance service.
Fintech's robust growth in Cambodia is offering larger investment opportunities in the business for both HKL and BAY. HKL personal loans increased to 20.3 billion baht at the end of March from 16.9 billion at the end of 2017 and 14.9 billion in 2016.
BAY shares closed Friday on the Stock Exchanged of Thailand at 38.25 baht, down 25 satang, in trade worth 13.5 million baht.