Opening the annual general meeting (AGM) season this year, Vietnam Technological and Commercial Joint Stock Bank (Techcombank) announced information about the “huge” investment amounting to more than $370 million (about 8.4 trillion dong) from two independent investors managed by Warburg Pincus. The investment will help this bank complete capital raising efforts from now till June 2018 in accordance with the plan adopted at the AGM on March 3, 2018.
Bui Quang Tin, CEO of BizLight Business School said “The fact that foreign investors want to purchase shares at Vietnamese banks is not new. This took place 10 years ago. However, the current moment is the time that Vietnamese government issues supervision and management mechanisms, especially the requirement that banks must meet Basel II standards to strengthen its governance, the amended Law on credit organisations 2017 supplemented at least 17 new points in the management and governance, etc. With these changes in management mechanism, the participation in M&A sector or share purchase of foreign investors at banks is understandable”.
“Foreign investors appraise very carefully any investment. And, foreign investors pour money in Vietnamese banks on the basis of having studied very carefully the potential of Vietnamese banks”, added Tin.
Earlier, the International Financial Corporation (IFC), member of the WB, approved the financial package worth more than $80 million for Vietnam Prosperity Bank (VPBank), raising IFC’s total financial support to VPBank to more than $200 million within eight months.
At the end of December 2017, Hochiminh City Development Bank (HDBank) awarded share ownership certificate to 76 foreign investors including many large financial institutions that are investing in Vietnam stock market such as Credit Saison (Japan), Deutsche Bank AG (Germany), JP Morgan Vietnam Opportunities Fund, CAM Bank (Japan), Dragon Capital (U.K), Vina Capital, etc. These investors spent $300 million (over 6.8 trillion dong) to own 21.5 percent existing stake of HDBank. Each investor owns no more than three percent stake of each bank.
Tien Phong Joint Stock Commercial Bank (TPBank) and FYN Fund Management have just signed a share purchase agreement. Accordingly, PYN Elite Fund will own 4.99 percent stake after TTBank’s issuance at nearly $40 million.
Recently, South Korean investors have shown special interest in Vietnam market. Recently, South Korea’s Hana Financial Group plans to expand its operations in Vietnam by becoming a shareholder of BIDV.
Prior to that, another Korean financial group, Shinhan, was also increasing its investment in Vietnam by completing its acquisition of ANZ. The world’s five leading credit card company Shinhan Card bought Prudential Finance Company (PVFC) in Vietnam at $151 million (5.52 times higher than the par value).
Besides Shinhan, the presence of Korean financial groups also includes Mirae Asset Group and Lotte Group. Lotte Card has officially bought the entire TechcomFinance Company from Techcombank.
Nghiem Xuan ThanhChair of Vietcombanksaid the bank plans to sell more than 350 million shares (equivalent to 10 percent of shares) to foreign investors in the first six months of 2018, after receiving the approval from the government.
A financial and banking expert said “Foreign investors see the potential of Vietnam financial market. Banks in Vietnam are in early stage and there is still room for improvement in terms of capital, governance and technology. In addition, Vietnam is a fertile ground for developing mobile financial services when there are 53 million mobile subscribers, and 40 million smart phone users.”
According to Tin, the fact that foreign investors pour capital into Vietnamese banks is a good signal because the capital contribution will be accompanied by increased commitment in management and transfer of technology.
Director of a joint stock commercial bank said, at the moment, many commercial banks in Vietnam are putting provision for nearly all of the bad debt sold to the Vietnam Asset Management Company (VAMC). “In the context that the real estate market is warming up while most of the bad debt is secured by real estate, in the near future, banks will have a good return upon completing the settlement of collaterals”.
It can be seen that consumer finance, retail banking, and mobile banking are still fertile ground for foreign investors. Banks select good strategic partners to access modern world governance system along with new technology.
