Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) has completed the sale of a 15 per cent strategic stake to South Korea’s KEB Hana Bank for 20.3 trillion dong ($875 million), it announced on Monday.
KEB Hana Bank became a major shareholder of BIDV on November 6, according to a regulatory filing by the Vietnamese lender.
Foreign banks are allowed to own as much as 30 per cent in a local bank.
As part of the sale, BIDV issued over 603.3 million new shares by raising its charter capital to 40.2 trillion, the highest among Vietnamese banks.
The transaction also marks the biggest M&A deal within the local banking industry.
KEB Hana Bank is required to hold the stake for at least five years. It will provide support to BIDV in terms of corporate governance, technology and digital banking, retail banking development, diversified asset portfolios, risk management and human resources development, BIDV said in a statement.
KEB Hana Bank’s investment in BIDV is also the first strategic investment project by a Korean bank in Vietnam, said Ji Sung Kyu, CEO of KEB Hana Bank.
Such collaboration is a hedge against the increasing economic competition, according to South Korean Ambassador to Vietnam, Park Noh Wan.
BIDV is Vietnam’s oldest and largest lender by total assets. Privatised in 2011, it got listed three years later and is currently the second largest bank in terms of market capitalisation at $6.2 billion.
KEB Hana Bank already operates two branches in Vietnam. Other South Korean banks have also ramped up presence in Vietnam, including Woori, The Industrial Bank of Korea, KB Kookmin Bank, Nonghyup, and Shinhan Bank, which acquired ANZ’s retail operations in the country.
Vietnamese lenders who have attracted strategic investments from global players include Vietcombank (Mizuho Bank), Vietinbank (IFC, MUFG), VIB (Commonwealth Bank of Australia and Eximbank – Sumitomo Mitsui). Meanwhile, Military Bank is reportedly considering a $240 million stake sale.