Vietnam Prosperity Commercial Joint Stock Bank (VPBank, HoSE: VPB) has announced the Resolution of the general Meeting of Shareholders to approve the treasury share repurchase plan. Accordingly, the bank plans to buy up to five percent of the outstanding shares as treasury shares (nearly 122 million shares). The purpose of this plan is to reduce the number of outstanding shares, support transactions, increase value for shareholders, etc.
VPBank plans to use the undistributed after-tax profit, which is about 14.110 trillion dong (based on the first quarter (Q1) financial statement). Based on the closing price of 22,800 dong per share on May 8th, VPBank needs to spend about 2.780 trillion dong to acquire all of the above shares. The trading is expected to be carried out via order matching or put through methods in 2020.
The last time VPBank bought treasury shares is October 2019 with about 50 million shares, equivalent to two percent of the capital. The transaction was made via order matching or put through with prices from 20,000 to 24,000 dong per share. The bank currently has 123.2 million treasury shares.
In addition, VPBank shareholders also approved the plan to repurchase the issued international bonds via appropriate method which is consistent with the regulations of the Stock exchange and relevant market. The maximum repurchase volume is 300 million US dollars of the issued bonds and within the allowed law. This plan is expected to be implemented in 2020 and 2021.
Previously, in a written request to shareholders general meeting, VPBank explained that from June 2019, the bank’s Board of directors (BOD) approved the plan to offer international bonds issued under euro Medium Term Note (EMTN) programme. Accordingly, the bank successfully completed the first phase issuance with a total face value of 300 million US dollars.
However, due to the global crisis related to the Covid-19 pandemic, the international corporate bond market (Eurobond) was under massive sale, the price of VPBank’s international bonds issued under EMTN programme which are registered at Singapore Stock Exchange are currently much higher than the price at the issuance. This can be a disadvantage for VPBank in raising other capital sources locally and globally, particularly when the borrowings from international organisations often have much lower interest rates.
The repurchase of bonds enables VPBank to issue bonds in international market in the future when it is necessary and when the international market regains stability.
The bank agreed to adjust the ownership limit for foreign investors to 15 percent of VPBank’s charter capital. Previously, according to the figures registered with the State Securities Commission, the ownership rate of foreign investors in VPBank was 22.77%. VPBank’s BOD once said that the financial crisis due to the pandemic’s impacts have caused foreign investment funds (especially from the US and Europe) to withdraw from Asian stock markets. Some foreign shareholders of VPBank also followed this trend, leading to a large amount of shares sold out. This trend will not stop until the global disease ends.
According to VPBank’s BOD, this is also an opportunity for VPBank to retain its ownership ratio, in order to offer stocks to other foreign investors who want to invest in the bank when the financial market actually returns to stability, thereby creating the opportunity to create a direct capital surplus.
The final approved content is to add the online meeting form which allows voting and election via electronic voting or other electronic forms, as well as the form of sending invitations to the general Meeting of Shareholders, sending documents and taking shareholders’ opinions by emails.
