Vietnam’s FE Credit and VPBank: from a 49% consumer-finance stake to a bank holding (2021)

A bet on high growth that first showed up as cost

The core of this decision was that a bank finding it harder to earn at home put capital into Vietnam’s growing consumer finance in two stages. First it secured half the shares of the largest consumer lender, FE Credit; next it entered a corner of the parent bank, VPBank. Leaving behind a Japan of thin lending margins, it sought a foothold in the retail finance of an emerging market thick with the unbanked — not by taking on management whole but in the lighter form of a stake. From Indonesia on to Vietnam, it was a move of Asian expansion, taking a share of growth by investing in local operators.

A stake that banked on growth, though, was made to pay a price early. FE Credit sank into the red in the post-pandemic downturn, and Sumitomo Mitsui Financial Group booked, for two years running, goodwill impairments together exceeding $1.3B (¥180bn). Across the sudden death of President Jun Ota, its overseas investments became objects of selection and cleanup under his successor, Toru Nakashima. This episode reflects how a method of expecting investment gains from emerging-market banks with high growth rates and high share prices can, over a short span, produce the opposite result — impairment. Whether it can settle in and wait for the fruit of dividends and cooperation — the success or failure of the Vietnam decision is left to the years still ahead.