Along with the wave of listing on the stock market, many banks will complete foreign investment before putting listed shares on Hochiminh Stock Exchange (HOSE) this year.
Orient Joint Stock Commercial Bank (OCB) and Nam A Joint Stock Commercial Bank (Nam A Bank) said that they would attract more foreign capital before listing shares on HOSE in 2019. According to Tran Ngoc Tam, general director of Nam A Bank, in 2018, the bank plans to increase capital from over three trillion dong currently to five trillion dong, but it has not completed yet, so it will continue to be implemented this year.
At OCB Bank, new foreign ownership ratio accounts for five percent of the total of 30 percent as prescribed, so there are many opportunities for foreign shareholders. OCB representative said that the bank was in the process of negotiating with foreign partners to sell capital.
Meanwhile, Vietnam International Joint Stock Commercial Bank (VIB) said that foreign ownership ratio was still about 10 percent and the bank planed to attract more foreign capital.
In the past year, when some banks implemented plans to list on the stock exchange, such as Hochiminh City Development Joint Stock Commercial Bank (HDBank), Vietnam Prosperity Joint Stock Commercial Bank (VPBank), Vietnam Technological and Commercial Joint Stock Bank (Techcombank) successfully offered shares to international organisations, earning hundreds of millions of dollars. HDBank sold over 21 percent of shares to no less than 10 foreign investors, earning $300 million before listing in early 2018.
Similarly, Techcombank increased its foreign capital when selling its shares to Warburg Pincus to collect $370 million before listing on the HOSE in 2018. At Asia Joint Stock Commercial Bank (ACB), after Standard Chartered Bank divested, the bank was quickly grouped. Alp Asia Finance Limited received a transfer and officially became a major shareholder, owning nearly 10 percent of ACB capital. Foreign capital at ACB currently reaches a maximum of 30 percent, therefore, ACB can sell 41.4 million treasury shares to improve the capital adequacy ratio (CAR) before 2020.
The market is also waiting for the sale of Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)’s capital to KEB Hana partner of Korea. In 2018, the bank consulted shareholders on offering and increasing charter capital through private equity issuance to foreign strategic investor, KEB Hana, with 17.65 percent of the current charter capital. The deal is expected completed this year.
Dominic Scriven, Chair of Dragon Capital, said that in the context that many banks are trying to increase capital mobilisation according to Basel II standards, the government could raise foreign ownership ratio threshold from 30 percent to 49 percent.
Vina Capital Managing director, Andy Ho also suggested, Vietnam’s banking industry should raise the threshold to attract foreign capital in the context of needing capital to boost restructuring. Foreign investors also expected to have a chance to own more shares.
Kanetsugu Mike, general director of Mitsubishi UFJ Financial Group (MUFG) said that, as a strategic shareholder of Vietnam Joint Stock Commercial Bank of Industry and Trade (Vietinbank), MUFG was ready to support VietinBank to increase its charter capital to facilitate business and this was relatively necessary. It was expected that the government of Vietnam would create conditions for international financial institutions to invest in the banking sector.
With Vietnam Bank for Agriculture and Rural Development (Agribank), this bank is in the process of equitisation, as at the request of deputy prime minister Vuong Dinh Hue, at the beginning of 2020, the process must be completed no later than the beginning of 2020. Many partners are “aiming” for Agribank, including the fourth-largest financial group NongHuypthe financial institution in Korea, “has offered” to support this bank in equitisation.
Subsidiaries of Agribank, ALC I Finance Company, also received an offer from Srisawad Corporation of Thailand to return 100 percent of ALC I’s charter capital to Agribank (200 billion dong) and pay all the original debt that ALC I borrowed from Agribank (323 billion dong) to fully own this financial company. Reportedly, the two sides signed a memorandum of understanding and are waiting for approval from the government.
In a recent analysis, Moody’s experts assessed that most of Vietnamese banks would still lack capital to meet Basel II standards (to be effective from 2020) and capital mobilisation to increase financial capacity would come mainly from foreign investors.
