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PetroVietnam pulls out of Hong Viet Bank deal
PetroVietnam's decision to pull out of the Hong Viet Bank project in line with Government policies has left shareholders exasperated.
PetroVietnam, which owns a 20 per cent stake, is the largest shareholder in the Hong Viet Bank project, which has initial charter capital of VND2.5 trillion (US$148.81 million).
Viet Nam International Bank (VIB Bank) holds a 9 per cent stake, Hoa Phat Group an 8 per cent, IPA Finance Investment Corp and Habeco hold 5 per cent each and Vietnam Airlines owns 3 per cent.
Time to cool down
Over the past few months, a number of State-owned corporations and national economic groups have been criticised for being too reckless when investing in securities and finance.
However, in an effort to ease soaring inflation, the Government has ordered the Ministry of Finance to strictly monitor investments in the banking system, finance and securities to ensure State capital earns money.
PetroVietnam chairman Dinh La Thang said PetroVietnam had pulled out of the Hong Viet Bank project in accordance with Government efforts to control inflation and stabilise the macro-economy.
Furthermore, the Government has stated that each State-owned corporation can only be a founding shareholder in one new bank.
PetroVietnam on the other hand was attempting to buy a stake in Hong Viet bank while it owned a 9.5 per cent stake in GP Bank.
Pham Viet Muon, deputy head of the Steering Committee for Renewal and Development of State Enterprises, said: "PetroVietnam is only allowed to invest in one bank. If they have already invested in GP Bank, they would not be granted a licence to set up Hong Viet Bank. If they insist on going ahead with the Hong Viet project, they would have had to sell their stake in GP Bank."
No great escape
Although it was relatively easy for the oil and gas giant to withdraw from the project, other shareholders will now have to decide whether to go ahead with the project or shelve it.
If the founding shareholders decide to cancel the project, which was launched in 2006, they will then have to deal with the thorny issue of recovering their investments - in addition to issues relating to personnel and infrastructure, the value of which is not easy to assess.
PetroVietnam bosses were not available for comment yesterday.
Furthermore, a number of individual shareholders, who have been trading Hong Viet Bank shares over the counter for more than a year - when bank shares were really 'hot' and investors rushed to buy ignoring some banks were still under projects, now find themselves in possession of high-risk holdings.
Responding to shareholder concerns, Le Xuan Son, head of Hong Viet Bank preparation board, said staff who had invested in Hong Viet Bank, would be able to invest in the other bank in which PetroVietnam has a stake, or withdraw their money.
With the OTC market, PetroVietnam is not liable, he said.
Hong Viet share prices have been trading for between VND13-15,000 each. Their face value is VND10,000.
"In the worst case, PetroVietnam will refund my money at current deposit interest rates. It's OK," said Dang Thi Dung, who intends to sell her 5,000 "priority" buying rights for shares.
However, for investors who bought Hong Viet's shares at price of VND25,000-35,000, their risk is growing.
If the remaining founding shareholders decide to go ahead with the project, they will need to re-apply for a licence from the State Bank of Viet Nam.
However, as the banking sector is not as attractive as it once was, the remaining founding shareholders may decide to cut their losses.
Government attempts to take the heat out of the banking system and to control soaring inflation have hit profits this year and a number of banks have posted billion dong write-downs.
VNS
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