As Bad Debt Burden Lifts, Vietnam Banks Attract More Foreign Capital

VietNamNet Bridge - Foreign investors are rushing to pour money into Vietnam’s banks which see a brighter future as the warming of the real estate market will help them collect debts from mortgaged loans.

Techcombank, one of the largest Vietnamese joint stock banks, has announced a huge investment of $370 million from two independent investors managed by Warburg Pincus. 

The capital will help the bank fulfill its plan to increase charter capital by June 2018 as decided by a shareholders’ meeting on March 3, 2018.

Bui Quang Tin, CEO of Bizlight Business School, said that foreign investors were pouring money into banks. 

The government of Vietnam has tightened bank management and monitoring, and instructed banks to observe Basel II standards. 

Meanwhile, the 2017 amended Law on Credit Institutions has at least 17 new provisions related to bank management.

“Foreign investors only invest after they thoroughly analyze the potential of the banks,” he commented.

IFC, an arm of the World Bank, approved a financial package worth $80 million for VPBank, raising its total financial support to the bank to $200 million within eight months.

In December 2017, HD Bank handed over the certificates of ownership to 76 foreign investors, including big financial institutions in the Vietnam stock market such as Credit Saison (Japan), Deutsche Bank AG (Germany), JP Morgan Vietnam Opportunities Fund, CAM Bank (Japan), Dragon Capital and VinaCapital.

The investors spent $300 million, or more than VND6.8 trillion, to acquire 21.5 percent of HD Bank shares. Each holds no more than 3 percent of the bank’s shares.

Meanwhile, TP Bank and PYN Fund Management have signed a contract under which the investment fund would get 4.99 percent of TP Bank shares after the new issuance. 

Analysts noted that South Korean investors have shown their interest in the Vietnam market. Hana Group recently decided to expand its business scale in Vietnam by becoming a shareholder of BIDV.

Another group from South Korea, Shinhan, has completed the acquisition of ANZ’s retail banking division, while Shinhan Card has bought PVFC, a finance company, for $151 million. 

Lotte Card has taken over TechcomFinance from Techcombank.

Nghiem Xuan Thanh, chair of Vietcombank, told the press that Vietcombank is planning to sell $350 million in shares, a 10 percent stake, to foreign investors. The plan would be implemented in the first half of 2018, after the bank gets approval from the government.

An analyst commented that foreign investors see great potential in retail banking and smartphone-based financial services. 

He said that foreign investment in banks is good news for the banking sector, because capital contributions are associated with commitments on technology transfer.

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