Vietinbank has got nods from the State Bank of Vietnam to transform its branch in Laos into a bank, according to a document released by the central bank late on Tuesday.
The unit will be 100 per cent owned by Vietinbank and named as Vietinbank Lao Limited with a charter capital of $50 million, located in Chanthabouly District, Vientiane.
Vietinbank Lao’s duration of operation is defined as long as the mother bank is still operated. It is allowed to execute banking activities in Laos in accordance with Lao and Vietnamese laws.
Vietinbank will have to open this banking company within two years.
Also late on Tuesday, the bank announced it would list the remaining shares of the state holding on the HCM City Stock Exchange. This is just an initial approval from the central bank, and the specific timeline was not given, a source from Vietinbank told DEALSTREETASIA.
Vietinbank’s charter capital is over VND37.2 trillion ($1.7 million), equivalent to 3.72 billion outstanding shares. The central bank is holding 2.4 billion shares, or a 64.46 per cent stake.
After listing additional shares, Vietinbank will become the sixth most influential stock to the VN-Index, following PetroVietnam Gas, Vinamilk, Vietcombank, property developer Vingroup and consumer major Masan Group.
Vietinbank chose Laos as the second foreign market after Germany because of the favourable conditions of the Vietnam – Lao political relationship. “The objective of Vietinbank Lao Limited is to become a leading commercial bank in Laos,” the source said.
The Bank for Investment and Development of Vietnam (BIDV) placed the first footprint in the Lao market in 1999. Its Lao – Viet Bank joint venture is Laos’ second largest bank in capital ($70 million). Last year, the bank’s profit hit $6.3 million.
Along with Laos, Cambodia is also a target market of Vietnamese banks with the presence of BIDV, Sacombank, Agribank, Military Bank and SHB. In November 2014, SHB inaugurated its third branch in Cambodia and is preparing a fourth one. Its first investment in the neighbouring country was worth over $37 million.
With potential for tourism, mining, hydropower, oil and gas and industrial plants, Cambodia is an attractive destination for international investors, said SHB chairman Do Quang Hien. “Investing in Cambodia is the first step in our global expansion strategy,” he added.