Vietcombank to sell 3 percent stake to foreign investors
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Vietcombank, Vietnam’s largest bank by market cap, has received permission from the securities watchdog to sell a 3 percent stake to foreign investors. The green light from the State Securities Commission (SSC) will allow the lender to make a private placement of 3 percent as part of its plan to ultimately sell 10 percent. The 3 percent could fetch around $270 million based on its current stock price.
Vietcombank last month received approval from the State Bank of Vietnam (SBV) to increase its charter capital by selling 10 percent to the Government of Singapore Investment Corporation (GIC) and existing strategic partner, Japanese bank Mizuho.
Now GIC will buy 2.55 percent while Mizuho Bank will buy the remaining 0.45 percent to keep its current 15 percent stake unchanged.
Last September the SBV approved Vietcombank’s proposal to increase its charter capital from VND35.98 trillion ($1.55 billion) to VND39.57 trillion ($1.7 billion). The capital has remained unchanged since 2016.
Vietcombank is one of many Vietnamese lenders that have been seeking to increase capital to meet international capital adequacy norms.
The country’s banks need to increase their charter capital to meet the Basel II capital adequacy ratio (CAR).
The accords prescribe capital of 8 percent of risk-weighted assets for all financial institutions, including in Vietnam, to cover operational risks.
State-owned BIDV, the second biggest bank by market capitalization, said last October it wanted to sell new shares to South Korea’s KEB Hana Bank, giving it a 15 percent stake in the company. The sale would be worth $735 million.
Vietnam caps foreign ownership of banks at 30 percent. The country has nine wholly-owned foreign banks, four state-owned banks and 31 domestic joint-stock banks.
Questions & Answers
Q.Which entities will buy the 3 percent stake Vietcombank has permission to sell?
Which entities will buy the 3 percent stake Vietcombank has permission to sell?
The Government of Singapore Investment Corporation (GIC) will buy 2.55 percent of the stake. The remaining 0.45 percent will be purchased by existing strategic partner, Japanese bank Mizuho.
Q.What is the primary reason Vietcombank is seeking to increase its capital?
What is the primary reason Vietcombank is seeking to increase its capital?
Vietcombank, like many Vietnamese lenders, is seeking to increase its capital to meet international capital adequacy norms. The banks need to meet the Basel II capital adequacy ratio (CAR).
Q.How much could Vietcombank's 3 percent stake sale to foreign investors fetch?
How much could Vietcombank's 3 percent stake sale to foreign investors fetch?
Based on its current stock price, the 3 percent stake sale to foreign investors could fetch approximately $270 million. This is part of a larger plan to ultimately sell 10 percent.
Q.When did Vietcombank last increase its charter capital?
When did Vietcombank last increase its charter capital?
Vietcombank's charter capital has remained unchanged since 2016. Last September, the State Bank of Vietnam approved a proposal to increase it from VND35.98 trillion to VND39.57 trillion.
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