Hard for Vietnam banks to sell 20% stake to strategic partners

Local banks find it hard to realize their plans to raise their foreign strategic partners’ ownership to 20% as they must seek approval from the Government and the State Bank of Vietnam and find a satisfactory striking price.

Local banks find it hard to realize their plans to raise their foreign strategic partners’ ownership to 20% as they must seek approval from the Government and the State Bank of Vietnam and find a satisfactory striking price, the state run online newspaper VnEconomy reported May 26.

Policy door:

OCB proposed the State Bank of Vietnam to raise stake of its strategic investor BNP Paribas (France) to 20% in an effort to scale up its charter capital to VND3trillion in 2011.

Southern Bank also planned to issue 16.34 million new shares to its strategic investor United Overseas Bank (UOB – Singapore) to raise its foreign stake to 20% from current 15% of charter capital.

After selling 15% stake to Temesek Holding to raise charter capital to VND3trillion, Mekong Bank proposed the SBV to raise ownership of this foreign investor to 20% of charter capital.

They are all awaiting Government’s approval.

Pricing matter:

Another reason for the difficulties of banks in raising foreign stake to 20% is that local lenders and foreign investors don’t reach a mutual agreement in stock selling prices.

Credit Suisse used to fail to advise Vietcombank on selling shares to strategic investors in 2007, due to “too high starting bid price”, the state media reported, adding that the Suiss investment bank is now the listed lender’s advisor to help it sell 20% stake to foreign investors.

A senior official said local banks are more cautious to sell shares to foreign lenders because of unfavorable economic conditions which had a negative effect on foreign banks’ operations; and low subscription prices which discouraged local banks to make the move.

As many as 10 foreign banks are to date strategic partners of local banks, however only 3 of them got approval to hold 20% stake of local lenders including HSBC (partner of Techcombank), May Bank (partner of ABBank) and Societe General (partner of SeABank). – Stoxplus.com

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial