Japan’s MUFG keen to up stake in Vietnamese lender Vietinbank: Report

Japan’s Mitsubishi UFJ Financial Group (MUFG), the largest foreign shareholder in Vietnam JSC Bank for Industry and Trade (Vietinbank), is reportedly looking to increase its ownership from the current 19.7 per cent to 50 per cent in the Vietnamese lender, should the government relax the overseas investment cap in banking.

The interest was expressed during a visit by Vietnam Prime Minister to Japan, according to national media.

The foreign ownership is still capped at 30 per cent in the banking industry, and Vietinbank, Vietnam’s third largest lender, is already close to that limit. Another major shareholder in the bank is International Finance Corporation (IFC), a unit of the World Bank Group, with an 8 per cent interest.

Meanwhile, IFC is working with an advisor to offload its stake in Vietinbank, according to a Bloomberg report.

MUFG injected $743 million for a 20 per cent stake in 2012. Prior to that, in 2011, IFC and IFC Capitalization Fund invested $182 million in equity and $125 million in subordinated debt in the Hanoi-headquartered bank, marking the first strategic investment by a foreign institution in a Vietnamese state-owned bank.

Vietinbank has a market capitalization of nearly $4 billion. The 8 per cent stake that IFC is looking to sell is valued at some $320 million.

Vietnam has proposed several securities law amendments including removal of ceiling for foreign ownership in listed businesses. Currently, the cap is 49 per cent. However, such regulations are not applicable for some specific industries, including banking, which has been proposing to the government to lift the limit further.

In theory, the local government allows overseas investors to take over loss-making and debt-ridden banks under its push to restructure the industry.

Also read: IFC seeks potential buyer for its stake in $4b Vietnam Bank