Vietnamese banks seek support from foreign capital
In bankers’ eyes, 2018 is the time to try to attract foreign capital to boost growth. However, they will have to scramble and compete for investors.
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A US$370 million deal was the ‘opening match’ of the 2018 M&A season when Warbug Pincus decided to invest in Techcombank, one of the fastest-growing banks in Vietnam.
Other banks have also been looking for foreign cash. VP Bank in 2017 raised US$300 million worth of funds from foreign investors. In the same year, HD Bank collected US$300 million from selling shares to 76 foreign investors who hold 21.5% of existing shares.
While VPBank and HD Bank offered low ownership ratios to foreign investors, other banks were seeking investors willing to make huge investments.
Sources said Vietcombank is speeding up the issuance of the additional 10% of shares to foreign investors. The Singapore-based GIC investment fund appears to be the investor with the most potential. The deal kicked off in 2016 and it is expected to wrap up this year.
Bankers have also been talking about the deal between Vietnam’s BIDV and the Republic of Korea’s KEB, a subsidiary of Hana Group.
Analysts say it is the right time for banks to seek foreign capital and for foreign investors to pour capital into Vietnamese banks.
Ngo Chi Dung, chair of VP Bank, said at a 2018 shareholders’ recent meeting that it is time to increase charter capital, and the opportunity needs to be seized now, not later.
VP Bank shareholders have approved the plan to increase the charter capital from VND15.706 trillion to VND27.8 trillion this year.
As for foreign investors, they put high hopes on the profit they can expect. The joint statement of Warbug Pincus and Techcombank mentioned the total outstanding balance of personal loans tripled in 2013-2016.
The number of high income earners has been increasing rapidly, pushing up demand for credit cards and consumer loans.
Bank share prices have been increasing sharply since 2017 thanks to banks’ satisfactory business performances. Vietcombank shares are being traded at VND72,000 per share, and VP Bank shares at VND64,000. Techcombank shares, in OTC market, are being traded at VND100,000.
An analyst noted that because many banks are rushing to seek foreign capital, they will have to compete with each other to become more attractive to foreign investors.
He said that foreign investors in the deals made public recently are all familiar names.
“It will take time to attract new investors,” he said.
