Domestic commercial banks accelerate foreign talks
Aiming to reach the target to complete the selection the strategic investors before listing shares on the stock exchange, domestic banks are accelerating negotiations with foreign investors as well as propose the authorities to increase the foreign ownership limit to lure in foreign investors.
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The pre-listing share sale is expected to raise $300 million for the bank, which counts Vietnam’s first female billionaire Nguyen Thi Phuong Thao as its major shareholder.
HDBank said that it would list on the Ho Chi Minh City Stock Exchange in early 2018, after completing the auction.
Unlike other lenders in Vietnam, the bank does not seek a single strategic investor who would normally hold 15 per cent of the shares.
Instead, it will court four overseas investors, offering less than 5 per cent of ownership to each. At present, numerous foreign investors from Hong Kong, Japan, and South Korea expressed their interest in becoming HDBank’s foreign investors.
HDBank reported bright business results. For the first nine months of 2017, HDBank reaped VND1.91 trillion ($84 million) in pre-tax profit, of which the parent bank earned VND1.7 trillion ($74.8 milion). This result, which is 1.5 times higher than the entire year of 2016, marked the bank’s highest achievement so far.
Assets under management reached VND174.5 trillion ($7.6 billion), a 26-per-cent increase from the same period last year. Bad debt takes up less than 1.14 per cent of all outstanding loans.
HDBank’s return-on-assets ratio is 1.18 per cent, while returns-on-equity stood at 18 per cent as of the third quarter of 2017.
Along with HDBank, Saigon Commercial Bank (SCB) is also negotiating with banks, investment funds as well as insurance companies from Norway, Indonesia, and China to sell at least 50%.
SCB expects to acquire at least US$700 million from the deal.
SCB is the first domestic bank to be permitted to sell at least 50 per cent of its stakes to foreign investors.
SCB wants to co-operate with investors who have the capacity to help SCB to increase its financial capacity, accelerate the restructuring process and simultaneously accompany SCB on a journey of long-term development.
Along with accelerating negotiations with foreign investors, these banks also proposed authorities to increase the FOL to lure in more foreign investors.
According to the government’s Decree No.69/2007/ND-CP dated April 20, 2007 on foreign investors’ purchasing of shares in Vietnamese commercial banks, the strategic partner is permitted to hold a maximum of 20% of the chartered capital and a maximum of 30% stake in a domestic commercial bank.
In case commercial banks have weak financial capacity—and are on the list of banks having to restructure—the holding ratios will be higher than the regulated ratios, however, the specific figure for individual banks will be decided by the prime minister.
Le Minh Hung, Governor of the State Bank of Vietnam, stated that increasing the FOL is to stimulate strategic foreign investors’ interest in domestic commercial banks.
In order to permit this increase, domestic commercial banks need to propose plans with a clear explanation for the prime minister’s approval.
