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Banking & Finance

Vietcombank prepares to sell 10% stake to foreign investors

Released at: 09:53, 26/02/2018

Vietcombank prepares to sell 10% stake to foreign investors

Photo from news.zing.vn

Government gives green light to sale, to take place during the first half of the year.

by Quang Huy

Vietcombank is expected to sell more than 350 million shares, or 10 per cent of its charter capital, to foreign investors during the first half of this year after receiving the green light from the government.

Chairman Mr. Nghiem Xuan Thanh told reporters that the private placement plan has received approval from authorities. Shares will be limited to a number of foreign investors through either a public or private auction.

Singaporean sovereign wealth fund GIC Private Limited is one of the potential buyers, Mr. Thanh said. Japan’s Mizuho Bank, Vietcombank’s largest foreign shareholder with a 15 per cent stake, is entitled to buy more shares to maintain its ownership ratio.

For now, Vietnam is maintaining the foreign ownership limit (FOL) on local banks at 30 per cent.

Mr. Nguyen Duc Hung Linh from Saigon Securities Incorporated (SSI) said Vietcombank is one of only a few banks with space available for foreign investors, of 9.12 per cent.

Vietcombank planned to complete the sale of a 7.7 per cent stake to GIC in 2016 but the parties failed to agree on a share price.

The bank’s shares closed at VND71,400 ($3.13) on February 23; double the figure at the end of 2016.

Ms. Pham Thi To Tam, an analyst at KIS Vietnam, said Vietcombank’s asset quality has been properly maintained and its non-performing loans (NPL) are the lowest in the industry, at 1.13 per cent as at end-2017.

The bank has sold shares to other local financial institutions to ease risks from cross-ownership and also plans to divest its stake in the national flag carrier, Vietnam Airlines, this year.

It is stepping up its retail and personal lending, which amounted to 32.7 per cent of total outstanding loans in 2017, up 25.3 per cent compared to 2016. Its pre-tax profit rose some 32 per cent year-on-year to VND11.3 trillion ($496 million) in 2017, mainly due to stronger customer and loans growth.

Other local banks are also seeking foreign investors. BIDV, one of the three largest State-owned banks, is considering a stake sale of up to 30 per cent to foreign investors. Regional powerhouses from South Korea and Japan are reportedly eyeing the deal.

Orient Commercial Bank (OCB) signed a comprehensive cooperation agreement in 2017 with South Korea’s Daegu Bank, preparing for further cooperation in the future, while LienVietPostBank is offering a stake of more than 10 per cent to overseas buyers.

After selling 23 per cent of its charter capital to 100 foreign investors last year, rising lender VPBank is reportedly considering another sale this year.

Meanwhile, the government is seeking foreign buyers for two weak lenders - OceanBank and GP Bank - in which it may lift the FOL to 100 per cent.

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