One of the biggest state-owned banks – the Commercial Bank for Foreign Trade of Vietnam (Vietcombank) – opens up further to foreign investors by offering 10% of its shares in the market. The plan is now waiting for an approval by the State Bank of Vietnam. Shares will be offered either in a public offering or at a private auction with a limited number of foreign buyers. One of the expected buyers is the Singaporean GIC fund, which tried to buy Vietcombank shares in the past but in the end did not manage to secure a deal. The largest foreign shareholder in Vietcombank is currently the Japanese Mizuho bank, holding a 15% stake.
The share offering will help Vietcom raise more funds together with its plans to divest from two other commercial banks – Military Commercial Joint Stock Bank (MB) and Vietnam Export Import Commercial Joint Stock Bank (Eximbank) – in a drive to reduce bank cross-ownership.
BDG insight:
As reported by Moody’s, the Vietnamese banking sector has seen rises in year-to-year profitability and asset quality. Additionally, Vietnamese banks are expanding in the field of retail banking (mainly consumer lending), bringing in new revenue sources, which are also linked to tapping opportunities in Fintech and the expansion of banking services to a growing part of the population. These developments all contribute to the interest of foreigners in acquiring stakes in Vietnamese banks such as Vietcombank.
On the other hand, the Vietnamese law governing bank ownership is a deterrent for foreign investors in this sector. Foreigners are allowed to own a maximum of 30% of shares in a Vietnamese commercial bank, with a limit of 20% for one foreign shareholder. This effectively prevents them from making key decisions in the bank’s management. It could also be the reason why BNP Paribas sold all of its shares in Oriental Commercial Bank (OCB) last December after holding them for a total of 10 years.
