VietNamNet Bridge - The deal signed today, December 27, between Tokyo Mitsubishi UFJ and Vietinbank can become a record M&A transaction in the financial sector of Vietnam when the investment value is up to $743 million.




The signing ceremony of the strategic investment and comprehensive cooperation agreements between the Vietnam Industry and Trade Bank (Vietinbank) and Tokyo Mitsubishi UFJ took place this morning in Hanoi.

Accordingly, Vietinbank will sell 20% of strategic stakes to Tokyo Mitsubishi UFJ, worth VND15,465 billion or $743 million. This is the largest merger and acquisition transaction ever in the banking sector.

Vietinbank also said to ask for the permit to sell 20% stake to Tokyo Mitsubishi UFJ through the issuance of new shares to increase charter capital to VND32,661 billion and equity capital to VND45,000 billion. After this transaction, Vietinbank will become the joint-stock commercial bank with the largest charter capital and strongest shareholder structure in Vietnam.

Vietinbank Chairman Pham Huy Hung said that this will be the largest M&A transaction ever in Vietnam's financial sector. The image of Vietinbank will be supported and enhanced with global business experience of Tokyo Mitsubishi UFJ.

For his part, President of Tokyo Mitsubishi UFJ - Mr. Nobuyuki Hirano, said this is part of a strategy to further expand the activities of Tokyo Mitsubishi UFJ in Asia. "Through the strategic cooperation with Vietinbank, we hope to further promote the provision of financial services in Vietnam and to better meet the requirements of diverse financial support of our customers," said Hirano.

If Mitsubishi UFJ is Japan's biggest lender, in which Tokyo-Mitsubishi UFJ is one of the biggest parts of it, VietinBank is considered one of the four biggest banks in Vietnam. 2012, VietinBank expects to earn VND7,500 billion of pre-tax profit.

In early 2011, Vietinbank sold 10% stake to the International Finance Corporation (IFC), a member of the World Bank, for $182 million in cash and $125 million in loans over the next 10 years. At present, the State holds 80.3% and IFC holds 10% of capital of Vietinbank.

Before Mitsubishi UFJ, Vietinbank almost reached an agreement to sell shares to the Bank of Nova Scotia (Canada). However, Nova Scotia’s request to receive all dividends and capital surplus in 2011 of was rejected by Vietinbank. So far, Vietinbank’s second strategic shareholder has not been named yet.

In addition to Mitsubishi UFJ, other Japanese partners showed their interest in the financial market of Vietnam. Earlier, the Bank for Foreign Trade of Vietnam (Vietcombank) successfully sold 15% stake to a Japanese bank, Mizuho. Mizuho is not only the first strategic partner, but also the only strategic partner of Vietcombank.

In 2007, Sumitomo Mitsui Financial Group acquired a 15% stake in Vietnam Export-Import Bank (Eximbank) for $225 million.

Compiled by S. Tung