With many positive support factors, banking stocks have had optimistic developments in the stock market over the last period. Though not any stock can maintain the “heat”, the reality shows that the more transparent banks arethe more attention they receive from investors, especially foreign ones.
At the beginning of June, the stock market witnessed one of the “hottest” listings in 2018 when Techcombank (coded TCB) listed on the bourse at 128,000 dong per share.
Noticeably, this deal attracted great attention from many foreign investors. Nguyen Le Quoc Anh, CEO of Techcombank said to prepare for this plan, the bank started three years ago with the purpose of selling to big investors in the world only.
“When I began to work for Techcombank in June 2015, the Board of directors at that time decided to list. And the first thing we had to do is to make financial reports in 2015, 2016 and 2017 in line with international standard (IFRS)”, said Quoc Anh.
The CEO of Techcombank also said in this first step, the bank invited professional international organisations to review the entire operation process, and legal basis to ensure its best compliance. What was not achieved in 2015 had to be done thoroughly in 2016 and by September 2017, Techcombank completed all necessary adjustments.
“At the beginning of February, we started to access foreign investment funds, just in time for the Lunar New Year. Many bank employees only had two days off to complete this important financial report in the year”, added Quoc Anh.
It can be seen that thanks to the implementation of the highest international standards in the sales plan, proving the quality of the bank, the registration to purchase Techcombank shares from foreign funds was very large with positive price.
Another noticeable case was shares of VPBank (coded VPB) which were listed on Hochiminh City Stock Exchange (STC) at 39,000 dong each, exceeding Vietcombank and becoming the “most expensive” and the “hottest” bank stocks in all the three bourses in 2017. VPBank was also the market concern at that time with the question: “Whether shares of this bank were listed at too high price?”
Richard Fitton, Head of Investment Bank division of Viet Capital Securities Company (VCSC), the listing consultant for VPBank, said during the sales process, VCSC, along with VPB’s management board, came to many large financial centres in the world to meet with global investors, including investment funds, investment funds that focused on emerging and marginal markets, speculation funds and Sovereign Wealth Fund (SWF).
Before deciding to invest in VPB shares, international investment funds spent at least one month to analyse financial and operational situation of the bank.
At the same time, investors met with the board of directors (in some cases, there were more than five meetings with VPB’s management board), conducted detailed discussions with CEO, finance director, risk management director and other senior personnel positions, met with Chair of the Board, and head of major departments.
Along with that, they also directly visited the central operation divisions of the bank (guarantee, debt collection, etc.) as well as conducted detailed studies about the banking sector in general and legal environment in Vietnam in particular to better understand about the mechanism of Vietnam banking sector and growth potential.
“These investment funds need to be completely convinced about core values, growth potential of the bank and the market before convincing investment board to approve the purchase”, said Richard Fitton.
Accordingly, three weeks before officially listing on STC on August 17, 2017, VCSC completed the sale of a large amount of VPB shares to foreign investors. The process was carried via book building method in line with international standards about IPO.
Reportedly, during the book building process, the registration to purchase VPB shares from foreign investors was higher than any private issuance transaction that had ever been carried out in Vietnam before.
It can be seen that, thanks to the efforts to carry out IR as well as the transparency of operation, information, VPBank succeeded in drawing the attention of large foreign investors, who were famous for high requirements for management and communication.
Dr Nguyen Tri Hieu, an economist told DTCK that not only Vietnam, in almost all other countries in the world, all financial reports of banks as well as businesses outside the bank, were independently audited by the world’s leading prestigious companies. Financial reports with transparent, clear, detailed information especially in the explanation, clarification, were the points that generated confidence among investors.
Also according to Dr Hieu, in Vietnam, financial reports are normally incomplete; explanations are very simple, especially in the bad debt segment, classification of debt, risk provision, bad debt recovered for reversal, etc. Meanwhile, this is the factor that banks and foreign investors put high emphasis on.
Hieu further analysed, VPBank, Techcombank and some other banks have had advantages when paying attention to the clear, transparent and detailed explanations about contents in the financial reports, contributing to building the prestige of the bank.
To meet the requirement on capital adequacy ratio under Basel II standard, by the end of 2020, banks are expected to increase the equity by 1.8-2 times from the current level, and listing on the bourse is the way to create better liquidity for shares and the capital mobilisation via the stock market.
Accordingly, the transparency of information via financial report is the selection of healthy banks so that stock price can be maintained at the right value and have large added value.
State Bank Governor Le Minh Hung also said in order to help the people understand better about the health situation of banks, in the near future, the State bank will ask financial organisations to publicly list on the stock market, announce periodically audited financial reports. Thereby, the people and investors may supervise and determine the financial situation of banks.
