Bank shares desired by foreign, refused by domestic investors

While foreign investors are hunting for bank shares to purchase, domestic investors are trying to withdraw money from bank projects.

Despite the current difficulties, foreign investors still believe in the long-term development potentials of Vietnam’s joint-stock banks. They continue injecting more money in local banks to become strategic partners of the banks.

Malaysia’s Maybank has got approval from the central bank to purchase An Binh Bank shares at a price 4-5 times higher than the price prevailing on the OTC market. France’s Societe Generale S.A on July 20, 2008 got approval from the State Bank of Viet Nam to hold 15% of chartered capital of Sea Bank.

On May 30, 2008, Eximbank officially completed procedures to choose Sumitomo Mitsui Banking Corporation (SMBC), one of the world’s leading banking groups, as its strategic partner.

The sale of stakes to the partner brought $225mil to Eximbank with the share price 6.42 times higher than face value, or 10% lower than the market price at the issuance time.

Phuong Nam Bank has got approval from the central bank to sell 5% more of chartered capital to Singapore’s UOB, which will raise the total ownership ratio of the foreign group from 10% to 15%. The domestic bank now has the chartered capital of VND1,434bil and total assets of VND18tril.

Most recently, Techcombank sold more stakes to HSBC, after which HSBC’s ownership ratio in Techcombank increased to 20%.

Singapore’s OCBC Group and VP Bank are fulfilling necessary procedures to raise the Singaporean partner’s ownership ratio to 15%.

Meanwhile, domestic economic groups have been withdrawing from bank projects. PetroVietnam, one of the six founding shareholders of Hong Viet Bank, has announced its decision to withdraw from the project.

Prior to that, two state-owned general corporations, Vinashin, a shipbuilder, and Vinatex, a textile and garment group, decided to withdraw from the project on setting up the Viet Nam Industries Joint-stock Bank. The Vietnam Steel Corporation and Viet Nam Paper Corporation remain the two founding shareholders of the bank.

2008 shareholders’ meetings’ resolutions all mention plans to raise chartered capital this year. The plans have been implemented by methods other than by issuing more shares as shares are unsalable in the context of the market’s falls. Moreover, the State Bank of Vietnam and State Securities Commission are trying to tighten share issuance as share dilution could hinder the market’s recovery. The unsalability of shares on the domestic market has also been one of the reasons that local banks have pushed up negotiations to sell stakes to foreign partners. (VNN)