Local banks hard to raise holding for foreign partners

Many local banks want to raise the holding of foreign investors from 10-15 percent to 20 percent, but this plan seems to be unfeasible as they must seek approval from the Government and the State Bank of Vietnam (SBV) and find a satisfactory striking price.

Orient Commercial Joint Stock Bank (OCB) and Mekong Bank are waiting for the government’s approval to continue to sell stake to foreign strategic partner to reach the foreign strategic partners’ ownership of 20 percent stake in an effort to scale up its charter capital to three trillion dong in 2011.

Meanwhile, Southeast Asia Commercial Joint Stock Bank (Southern Bank) is also waiting for the central bank’s decision to issue 16.34 million new shares to its strategic investor namely United Overseas Bank (UOB – Singapore) to raise its foreign stake to 20 percent from current 15 percent stake.

After selling 15 percent stake to Temesek Holding to raise charter capital to three trillion dong, Mekong Bank proposed the SBV to raise ownership of this foreign investor to 20 percent of charter capital.

In fact, these banks must get approval from the central bank and the government for the raise of foreign strategic partners’ ownership into the local bank.

Till date, the banking system has witnessed three banks raising the holding of foreign partners from 15 percent to 20 percent including Techcombank sold 20 percent stake for HSBC, ABBank sold 20 percent stake for Maybank and SeABank sold 20 percent stake for Societe General.

Credit Suisse is providing consulting services for Vietnam Commercial Joint Stock Bank for Foreign Trade (Vietcombank-VCB) to sell 20 percent stake for foreign investors. This Swiss investment bank used to fail to advise Vietcombank on selling shares to strategic investors in 2007, due to “too high starting bid price”.

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. – Vietbiz24

Posted by VBN on May 27 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry