Vietnamese banks expect big inflow of foreign capital

Tens of trillions of VND is expected to be poured into Vietnamese banks by foreign investors in 2019 and 2020 as negotiations on many deals are running smoothly.
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Tens of trillions of VND is expected to be poured into Vietnamese banks by foreign investors in 2019 and 2020 as negotiations on many deals are running smoothly.

A transaction office of Vietcombank

After successfully selling 3 percent of its capital to foreign investors to gain 6.2 trillion VND (nearly 266.4 million USD) in late 2018, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) is promoting the sale of another 6.5 percent from now to 2020.

Vo Viet Hung, head of the board for capital increase at Vietcombank, said the roadmap for the 6.5-percent stake sale is awaiting the approval of the State Bank of Vietnam (SBV) as well as relevant ministries and sectors.

Many foreign investors are planning to pour money into this bank, which posted the highest profit in Vietnam. Notably, GIC, an investment fund of the Singaporean Government, has expressed its intention to continue bidding for Vietcombank shares after purchasing 2.55 percent of this bank’s capital last year.

Hung said the stake offering has been rather smooth so far since a number of foreign investors have shown their interest.

Meanwhile, the Joint Stock Commercial Bank forInvestment and Development of Vietnam (BIDV), another major bank, isnegotiating the sale of part of its capital to KEB Hana Bank of the Republic ofKorea.

Chairman of BIDV’s Board of Directors Phan DucTu said procedural problems have been handled, but the two sides haven’t reached consensus on the price issue. If successful, this will be one of the largest transactions in the market.

Not only major banks, poor-performing ones are also attracting great attention from foreign investors.

At a recent meeting with Prime Minister Nguyen Xuan Phuc on the sidelines of the G20 Summit in Osaka, Senior Managing Director and Executive Officer of Japan’s J Trust Co. Ltd Nobiru Adachi said his firm has expressed its interest in purchasing the Vietnam Construction Bank (CB) in a document sent to the SBV after considering financial statistics of the CB.

J Trust believes that in a short period of time, it will help restructure the CB successfully and regain the previous stature ofthis bank, Nobiru Adachi noted.

According to the SBV, it has submitted to the Prime Minister a plan on the transfer and restructuring of Ocean Bank after selling this bank to a foreign investor. However, the name of this investor has not been revealed.

The National Financial Supervisory Commission said aside from J Trust, other foreign investors like Srisawad Corporation of Thailand and Clermont of Singapore have expressed the wish to purchase or take part in the restructuring of poor-performing banks and credit organisations in Vietnam.

Financial experts said there are many factors that direct investors’ interest in poor-performing banks, including the good growth of Vietnam’s economy and improving performance of local banks.

Additionally, the Government has declared that it won’t license the establishment of foreign invested banks until the end of 2020 in order to focus on dealing with domestic poor-performing banks and connecting with foreign investors.

Economist Can Van Luc noted there are signs indicating the recovery of bank mergers and acquisitions (M&As). He added apart from ailing or big banks, many other joint stock banks such as SHB, NCB and OCB are also seeking foreign partners.

Meanwhile, Dr Bui Quang Tin, CEO of the BizLightBusiness School, said the pressure of complying with Basel II capital requirements from now to 2020 will make many banks face the M&A problem.

Furthermore, under the strategy for developing the Vietnamese banking sector until 2025, the State will reduce its owner ship at State-owned banks. That will make the banking M&A market even more vibrant in the time ahead, Tin said.-VNA