Is there a third investment wave in Vietnam banks?
While some analysts note that a number of foreign banks have withdrawn capital from Vietnam banks, others see signs of a third investment wave from foreign investors.
 |
The first wave of foreign investment in the banking sector occurred in 2005-2008, when bank shares were traded at sky high prices at hundreds of thousands of dong per share.
The first foreign strategic shareholders in Vietnam banks included ANZ, which acquired a 10% Sacombank stake in 2005, Standard Chartered which had a 9% ACB stake in 2005, and HSBC which bought a 10% Techcombank stake in 2005 and later raised its ownership ratio to 20%.
OCBC bought a 10% VP Bank stake in 2006 and later raised the ownership ratio to 15%, Societe General had a 20% SeABank stake in 2008, and BNP Paribas invested in OCB in 2009.
The second wave was seen in 2011-2014 with a number of outstanding deals such as the US$60 million investment by Commonwealth Bank in VIB Bank in 2011 and the US$40 million investment by IFC in An Binh Bank in the same year.
The other big deals included Mizuho pouring US$576 million into Vietcombank in 2012 and Bank of Tokyo – Mitsubishi buying a 20% VietinBank stake at US$743 million in 2013.
The stock market plunged to its bottom in 2012, but has bounced back since then. The strong rise recently of bank share prices has caused foreign investors to divest shares.
ANZ has left Sacombank after seven years, while OCBC divested from VP Bank in 2013. Since the beginning of the year, the market has seen HSBC leaving Techcombank and Standard Chartered Bank planning to leave ACB.
However, analysts say the banking sector has become attractive again, and can attract foreign investment, especially when foreign investment has been heading for Vietnam in the context of stable macroeconomic conditions and GDP growth.
On December 7, TP Bank and PYN Fund Management signed a contract under which PYN Elite Fund will own a 4.99% stake of TP Bank at the price of US$40 million. TP Bank has announced a plan to list shares on the bourse soon.
On December 8, the OCB board of directors announced a ceiling for foreign ownership ratio at 23.66%.
Sources said many banks are rushing to look for foreign strategic shareholders. Vietcombank and Vietinbank, where the state still holds a controlling stake, have left open the plan to admit foreign shareholders.
Meanwhile, BIDV, another bank in the ‘big four’, is said to be planning to issue 10% of shares specifically to a strategic investor, a bank from the Republic of Korea.
