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Vietnamese banks seeking foreign partners
A series of affairs on selling bank stakes to foreign investors have been reported recently. Bank shares have become cheaper, and it is now the right time for foreign partners to seek their room in domestic banks.
After wrapping up the deal on selling 10 percent of stakes to the International Financial Corporation IFC, Vietinbank, an equitized bank on May 31, said it continues issuing more shares, worth 15 percent of the chartered capital, to another foreign strategic investor – the Canadian Bank of Novascotia (BNS).
When asked about the share prices, a manager of Vietinbank said the price has been defined after an agreement was reached between the two parties which is suitable to a strategic partner and high enough to ensure the benefits of both the bank and its shareholders.
Finally, BNS has to pay 3570 billion dong for 357 million shares, which means the sale price is equal to the face value, at 10,000 dong per share.
Credit Suisse has been chosen by Vietcombank as its consultant in the deal of selling 20 percent of Vietcombank’s stakes to foreign investors.
A lot of other banks are also planning to continue selling stakes to foreign investors until the foreign ownership hits the ceiling level of 20 percent.
On July 8, PNB and VIB got the nod from the State Bank of Vietnam on the sale of selling shares to the existing foreign strategic investors.
PNB will raise its chartered capital from 3049 billion dong to 3212 billion dong from selling shares to United Overseas Bank (OUB). The foreign partner has decided to purchase 16.35 million shares of PNB (5 percent) to raise its ownership ratio in the domestic bank to 20 percent.
Meanwhile, VIB has also got the permission to raise its chartered capital from 4 trillion dong to 4250 billion dong by selling shares to Commonwealth Bank of Australia (CBA). The foreign bank will buy 25 million shares more to raise its total ownership ratio to 20 percent (85 million shares).
Similarly, OCB on July 11 sold 29 million shares to BNP Paribas, which has raised the foreign bank’s ownership ratio in OCB from 15 percent to 20 percent.
Trinh Van Tuan, General Director of Phuong Dong Bank, said in fact, the plan on selling five percent of stakes to BNP Paribas was set up nearly one year ago. However, the deal has just wrapped up because it was necessary to follow many procedures.
Commenting about the tendency of selling shares to foreign financial institutions, experts say it is a wise move taken by domestic banks to raise their chartered capital to the required level. Commercial banks must have the chartered capital of three trillion dong at least by the end of 2011. Meanwhile, it is really not easy to seek capital at this moment, when the stock market remains gloomy.
Le Dat Chi from the HCM City Economics University, said that the banks which have three trillion dong in chartered capital are also trying to sell shares to foreign investors now, because they want to improve the financial capability. In the future, banks need to become stronger with big chartered capital to survive in a stiffly competitive environment.
Meanwhile, it would be profitable for foreign investors to purchase bank shares at this moment, because in a gloomy stock market, they can easily buy shares at reasonable prices.
Regarding the bank share prices, Huynh Buu Son, a well known economist, said that if banks sell stakes to foreign investors at the prices lower than the face values, they will have bigger opportunities to seek foreign strategic shareholder.
Son said that there are too many choices for foreign investors at this moment. Meanwhile, bank shares have become less attractive than previously.
Son believes that bank shares would keep less attractive in the eyes of investors. Though commercial banks all have reported big profits, the lower rate of return of banks in comparison with the businesses in other fields would make it difficult to attract the cash flow.
OCB’s General Director said that in long term, Vietnam’s financial market is really potential. However, in short term, one cannot say that foreign investors would rush to inject money in the banking sector.
vietnamnet, VnExpress
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