IFC continues to invest in Vietnamese banks

After signing an investment contract to become a strategic shareholder of Vietnam Commercial JS Bank for Industry and Trade (VietinBank-CTG), International Finance Corp (IFC) under the World Bank (WB) continued to promote its investments in the Vietnamese banking industry via pouring capital into An Binh Commercial JS Bank (ABBank).

By the end of December 2010, ABBank successfully issued 600,000 convertible bonds with 24 month term totaled at 600 billion dong for two investors namely IFC and the Malyasia-owned Maybank.

Particularly, Maybank purchased 120 billion dong of bonds to maintain its holding of 20% after the conversion and IFC took 480 billion dong of bonds to own 10% stake into the local bank after the conversion. IFC will become ABBank’s shareholder in December 2012 after converting these bonds into shares. Additionally, IFC will also sign a contract to fund $25 million for ABBank in Q1, 2011.

Thus, by the end of 2012, two shareholders including Maybank and IFC will hold 30% stake into ABBank, the maximum rate in accordance with the current regulation on the foreign shareholders’ holding rate into the local bank. With these investment sources, ABBank will have enough capital to hike its chartered capital and equity according to its roadmap till 2013.

Apart from this investment, the cooperation between ABBank and IFC will support in increasing the administration capacity, monitoring and products. IFC is also supporting the development of small and medium sized enterprise (SME) loan product, long term loans to fund energy efficiency program and support additional funding to guarantee for export and import customers.

Meanwhile, Maybank will support in risk management, administration improvement, professional development and training and project funding.

According to specialists, raising capital from foreign investors is always the target goal of many enterprises and financial institutions because the capital sources from the international market are very plentiful together with competitive price. Recently, although the global economic crisis has been not over yet, Vietnam’s banking system still received much interest of foreign investors.

As for many big investors, when the market is difficult, they will have more conditions to choose the good partner with reasonable price. Therefore, despite difficulties, foreign investors have still taken advantages to invest in Vietnam.

IFC is a typical example. In late last year, this financial institution invested abour $311 million into VietinBank. Of which, it will buy about $186 million of stake into VietinBank (equaling to 10% stake). In addition, IFC will also provide VietinBank a secondary loan worth $125 million with a loan duration of 10 years.

Previously, IFC has also succeeded in many investment deals into Vietnamese banks such as Asia Commercial Joint Stock Bank (ACB), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank-STB), Vietnam Technological and Commercial Joint Stock Bank (Techcombank), and Vietnam Export Import Commercial Joint Stock Bank (Eximbank-EIB). In addition, IFC also joined many investment funds in Vietnam and most recently invested in ABBank.

However, financial specialists also stressed that in order to convince the investors to pour their capital in the present moment, banks and enterprises must demonstrate the capacity as well as conditions in accordance with strict requirements such as the international standards-oriented administration system, effective monitoring system, stable human resource mechanism, sustainable business growth and typical strengths.

Moreover, the local banks and enterprises must be willing to expand relations and receive cooperation from outside and ready to change their habits for the development target. – Vietbiz24

Tags: IFC