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Seeking foreign strategic partners no longer in fashion
Seeking foreign strategic partners has not been listed as one of the important issues that bank management boards want to consult to shareholders at this year’s shareholders meetings.
Three years ago, especially in 2007 and 2008, joint stock banks rushed to draw up the plans to look for foreign strategic partners, because they believed foreign shareholders would help improve the corporate governance and bring new banking technologies which help bring fat profits.
In late 2008 and early 2009, when the global financial crisis broke out, An Binh Bank wrapped up a deal on selling stakes to Malaysian Maybank. Vu Van Tien, Chair of An Binh Bank was proud of the affair, considering this a “bright part” in the financial investment activities in Vietnam in the context of the crisis.
In 2010, IFC, the International Financial Corporation, planned to obtain 10 percent of the stakes of An Binh Bank.
In September 2010, Commonwealth Bank from Australia wrapped up a plan to invest in VIB Bank and became the foreign strategic shareholder. Chair of VIB Bank, Han Ngoc Vu called the move an important factor for the new development strategy of VIB Bank. The deal of selling stakes to Commonwealth Bank once stirred up the public, because the share price at which VIB Bank sold to the Australian partner was much higher than the prices of listing bank’s shares.
Earlier this year, VietinBank announced that it had completed the sale of stakes to IFC.
In recent days, the investor’s attention has been put into Vietcombank, when the bank reported it would complete the plan to seek foreign strategic partners this year. In fact, the plan to seek foreign strategic partners was announced by the bank three years ago.
Seeking foreign strategic partners is a part of the plan to equitize the bank. People have been waiting with impatience for the implementation of the plan over the last few years. Being a big bank which has been famous in Vietnam, analysts believed that it would be very easy to attract foreign investors. However, to date, the bank still cannot find suitable foreign strategic partners.
Not only Vietcombank, but many other banks also still have not succeeded in seeking foreign strategic partners, despite the strong determinations by the banks. Especially, some banks have even set up the divisions in charge of looking for foreign partners.
Nevertheless, things seem to be quite different this year.
A manager of Military Bank which once also tried to look for foreign strategic partners, now said they do not think that foreign strategic partners are indispensable for the bank any more. He said a lot of questions have been aroused which need answers.
“What will we get if we have foreign strategic shareholders? Will we be inferior to other banks if we don’t have foreign strategic partners? Why haven’t we got foreign strategic partners? That are the questions,” the manager said. “We finally decided that having foreign strategic partners is not a must”.
According to him, when a bank has foreign partners, it will get financial support, learn banking technologies and experience in management. However, in reality, a lot of Vietnamese banks still can smoothly increase their capital and operate well. Especially, the business results of the Vietnamese banks are still better than some other banks with foreign ownership.
“We still have been standing firm in the face of difficulties for the last three stormy years. Business and growth rate indexes are getting better year after year. This means that we do not need someone else to take a seat in the management board,” he said.
The thing that makes Military Bank worried when choosing foreign partners is the possible interest conflict, if the foreign partners are or will be 100 percent foreign owned banks in Vietnam. “How will we compete with the foreign banks, if they are also our partners?” the manager said.
There are now two choices for Military Bank: either to let foreign partners to join the management board, or the bank needs to try to grow up itself. The bank is considering choosing the second method by using available sources and hiring foreign advisors when necessary.
vietnmanet, VnExpress
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