BIDV to offload 25% stake to foreign investors

The Bank for Investment and Development of Vietnam (BIDVwill offload more than 20 per cent of its equity to foreign investors this year- a pattern that has been followed by several other listed banks, this year.

About 15 per cent stake in BIDV will be sold to a strategic partner, while another 10 per cent is meant for a financial investor. “The foreign investors will provide technical assistance, help increase governance and risk management capacity, develop new products and enhance BIDV’s competitiveness,” the lender’s vice chairman Tran Phuong told Reuters.

At the same time, the Ho Chi Minh City Stock Exchange-listed bank plans to increase its charter capital by 10 per cent by issuing more shares to the existing shareholders, by June. This represents a potentially new capital of some VND31 trillion ($1.45 billion).

In 2014, BIDV reported a gross profit of over VND6 trillion ($281.7 million), up 20 per cent year-on-year. The Hanoi-based bank is determined to retain the profit growth of no less than 20 per cent in 2015.

Equitised in 2011, BIDV listed its shares on the exchange on January 24 last year. Currently, it is the sixth largest stock in terms of market capitalisation.

The state has a majority stake in the bank, 95.76 per cent, represented by the State Bank of Vietnam. In line with the equitising roadmap, until 2015, the state shareholding will be reduced to 65 per cent. Meanwhile, foreign ownership in a Vietnamese commercial bank shall not exceed 30 per cent, two thirds of which is the highest holding rate for a single foreign investor.

The bank’s stock, coded as BID, closed 0.6 per cent off on Monday to reach VND17,300 ($0.81).

Prior to BIDV, a number of listed banks have offered strategic stakes to overseas investors. Mizuho Bank has a 15 per cent in VietcombankThe Japanese organisation paid $567.3 million for this stake in 2011. A year later, another bank from Japan, The Bank of Tokyo-Mitsubishi UFJ, purchased 19.73 per cent in Vietinbank for $743 million.

Meanwhile, Eximbank has Sumitomo Mitsui Banking Corporation as a strategic shareholder with a 15.07 per cent stake. Asia Commercial Bank has run out of room for overseas shareholders.

Large local banks are not alone in seeking foreign partners, Vietnamese central bank has been encouraging the foreign financial organisations to join the banking system and lend a hand in restructuring it, by purchasing “weak”, loss-making banks.

As another measure, authorities have said that banks are free to merge themselves on a voluntary basis. Therefore, rumours have it that several small lenders will soon be merged into big banks – for example, Mekong Housing Bank could merge into BIDV.

Mekong Housing Bank offered initial shares to the public in 2011 but has not listed since then. After more than 16 years of operation, its total asset reached almost VND40 trillion ($1.88 billion), the bank has a large network of 240 outlets, across the country. However, its performance has not been outstanding. According to the latest annual financial statement, its 2013 gross profit was VND142 billion ($6.67 million), relatively low compared to other lenders. 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.