The Board of directors (BOD) of Vietnam Prosperity Commercial Joint Stock Bank (VPBank VPB) has issued a Resolution on the purchase of outstanding shares from the market to make treasury shares.
Accordingly, the bank will issue a maximum of 50 million shares on the market, equivalent to 1.976 percent of the charter capital to be used as treasury shares. The aim is to reduce the number of outstanding shares, support trading, and increasing value for shareholders.
The source to buy these shares is taken from the undistributed after-tax profit as of December 31st 2018.
The expected time of purchase is in the fourth quarter of 2019, under matching order or put through on the stock exchange. Bao Viet Securities Company was chosen to be the agency that performs this purchase.
VPBank currently has more than 73 million treasury shares, equivalent to 2.894 percent of charter capital. If the purchase this time is successful, the bank will hold a total of nearly five percent of charter capital of treasury shares.
Previously, in mid-August, VPBank consulted shareholders in writing about the plan to buy a maximum of 10 percent of the outstanding shares to be used as treasury shares, equivalent to a maximum of 245 million shares and the plan was approved. Thus, the decision of the bank’s Board of directors this time about purchasing 50 million shares is only equivalent to about 20 percent of the plan.
In the announcement sent to shareholders about taking comments on buying treasury shares, VPBank said that the bank’s potential growth opportunities are highly valued. However, due to the macro factor of the market and the banking sector, the attractiveness of VPB shares to investors is no longer as good as before, leading to the considerable decline of VPBank share price compared to the previous time.
“The purchase of treasury shares aims to stabilise the bank’s shares, reduce the number of outstanding shares in order to increase the profitability on each share of investors. At the same time, the purchase of shares to be used as treasury shares is considered investing in a valuable asset with high profitability in the near future,” the report clearly stated.
On the stock market, VPB share of VPBank has been fluctuating under 20,000 dong per share since early April to August 23rd the time VPBank consulted shareholders about the purchase of treasury shares. As of August 23rd, the share price rose to above 20,000 dong per share and has been maintained until now. Closing the session on September 5th, VPB share price stood at 20,250 dong per share.
VPBank’s 2018 financial statemented showed that after provisioning funds, the bank’s undistributed profit was 3.413 trillion dong. Assuming that the stock price is around 20,000 dong, VPBank will have to spend only one trillion dong to own the above 50 million mentioned treasury shares.
