VPBank announces agreement to issue 15% of charter capital to Japan’s SMBC

The Vietnam Prosperity Joint Stock Commercial Bank (VPBank) announced on March 27 that it has entered into an agreement with Japan’s Sumitomo Mitsui Banking Corporation (SMBC) - a subsidiary of the Sumitomo Mitsui Financial Group, Inc. (SMFG) - to issue 15 per cent of equity through a private placement, officially welcoming SMBC as a foreign strategic investor.

The investment from SMBC will help it raise VND35.9 trillion (approximately $1.5 billion) of Tier 1 capital, increasing its owner equity to approximately VND140 trillion ($6 billion) from VND103.5 trillion ($4.4 billion). This comes as part of the capital raising plan VPBank has been implementing during 2022-2023 in order to enhance its long-term financial strength and support it reaching an ambitious growth strategy over the next five years.

Following the latest strategic investment from SMBC, VPBank will become Vietnam’s second-largest bank in terms of owner equity, which allows it to serve a wide range of customer needs in various segments, including retail banking, corporate banking, and SMEs. The robust capital stance will also back VPBank in serving large-scale enterprises, particularly FDI and multi-national companies that have been or will be investing in Vietnam.

The new investment also proves the strong and trusted cooperation between SMBC and VPBank, as the two parties entered into a Business Partnership Agreement in May 2022. Previously, in 2021, SMBC Consumer Finance Co., Ltd - a subsidiary of SMFG - acquired 49 per cent of equity in FE Credit, a wholly-owned subsidiary of VPBank.

SMBC, through this investment, will contribute towards VPBank’s growth by leveraging its know-how and business expertise accumulated in other Asian markets. It is expected to help accelerate digital transformation at VPBank, in order to deliver customer-centric banking products and services and a superior customer experience.

Furthermore, thanks to the great reputation of a large financial institution like SMBC, the strategic deal is anticipated to attract and encourage potential FDI companies among the 200,000 corporate clients of SMBC to come and expand their investment in Vietnam. These potential enterprises, once entering Vietnam successfully, will also likely become clients of VPBank.

For SMBC itself, through the rapport built with a local bank like VPBank, the group will be able to strengthen its foothold in the country and exploit opportunities to serve local investment projects, particularly those in the field of infrastructure construction and green and sustainable growth that the group has been paying attention to in recent years.