Vietnamese banks in race to attract foreign capital
(VEN) - Vietnamese banks are racing to attract foreign capital in order to improve their financial capacity, especially in the context of a flourishing stock market and rising banking stock prices.
Luring foreign investors
Financial-banking expert Dr. Nguyen Tri Hieu said many commercial banks are seeking to lure foreign capital in order to raise capital in the current context.
The shareholders of Viet Capital Bank approved the plan to issue additional shares of up to VND1 trillion in the first quarter of 2021. In addition, the bank has closed the list of shareholders to collect written opinions on authorizing the board of directors to increase foreign ownership to 30 percent, contributing to increasing foreign capital, improving financial strength and enhancing competitiveness.
Nam A Bank is implementing a plan to increase its charter capital to VND7 trillion through the issue of 57 million shares to pay dividends at a rate of 12.4878 percent and a private placement of 143 million shares. The bank said it is in the process of negotiating with foreign investors.
OCB plans to sell another 10 percent of its shares to foreign investors after completing the sale of 15 percent shares to Japan’s Aozora Bank.
NCB shareholders have approved the plan to sell shares to foreign strategic investors but according to the board of directors, the bank will not sell at all costs and will rely on the set criteria to seek the right partners.
Foreign ownership opportunities
Decree 01/2014/ND-CP states that the ownership ratio of a foreign strategic investor must not exceed 20 percent of the charter capital of a Vietnamese credit institution, and the total ownership ratio of foreign investors in a domestic credit institution must not exceed 30 percent of the charter capital. Currently, many Vietnamese banks are looking to take advantage of these ceilings. At restructuring banks or the three zero-dong banks, foreign partners can buy 100 percent of the capital with the consent of the government.
According to the EU-Vietnam Free Trade Agreement (EVFTA), European banks will be able to buy up to 49 percent of only two local commercial banks without waiting for a decision to increase the foreign ownership limit. The offer does not apply to four joint-stock commercial banks in which the state still holds the controlling stakes (BIDV, VietinBank, Vietcombank, and Agribank).
Many commercial banks have promoted foreign capital attraction
The Vietnam Investment Securities Company (IVS) considers VIB, VPBank, Techcombank and ACB to be the most likely candidates for increased foreign ownership limit. ACB has currently run out of foreign ownership room, while Techcombank, VIB and VPBank have lowered their rooms to 22.5 percent, 20.5 percent and 15 percent, respectively.
Nhu Dinh Hoa, general director of the Bao Viet Securities Joint Stock Company, said Vietnam continues to be evaluated as a bright spot in the wave of foreign capital inflows into emerging markets thanks to its macroeconomic stability, positive medium- and long-term growth prospects, and high valuation of its Vietnamese stock market.
