|After completing the sale of 15% of capital to Aozora Bank, OCB is choosing a foreign partner to sell an additional 10% of capital.|
The wave of foreign “cocoon-in-law”
During the last Annual General Meeting of Shareholders (AGMS) season, many banks continued to reveal their intention to find foreign partners. Specifically, in the plan to increase charter capital by 32%, from VND10,959 billion to VND14,449 billion this year, OCB intends to offer 70 million shares to domestic and foreign investors through private placement. In case foreign investors buy shares, the bank will ask shareholders to increase foreign room to a maximum of 30%. OCB Chairman Trinh Van Tuan said that some foreign organizations have expressed interest in OCB shares.
The 2021 AGMS of LienVietPostBank also approved the plan to increase charter capital, in which the private issuance of 66.7 million shares to foreign investors, raising the maximum ownership rate of foreign investors up to 9.99%. According to the leader of this bank, the capital sale to foreign investors is likely to be completed this year.
SCB also said it is in the process of negotiating with foreign strategic partners to sell part of its capital to improve its financial strength after completing the restructuring.
VPBank also has a private placement plan for foreign strategic partners since 2019, but has not been completed so far. The bank is currently negotiating with a number of partners and expects this process to be completed by the end of this year.
Similarly, many other banks such as Ban Viet, Nam A, SCB, NCB are also implementing plans to seek and select foreign partners to improve their financial capacity and competitiveness.
Lock the room to welcome strategic partners
After a period of massive capital from 2005-2011, from 2012, the market witnessed the breakup of many deals. The reason for the departure of foreign partners is for investors to take profits after achieving the expected profit, some others are due to the problem of many differences in terms of culture and business model.
After these breakups, at many banks there are still gaps waiting for new partners to appear. In addition, although there have been many deals to sell capital to foreign investors, the foreign room in Vietnamese banks is still quite large. Except for ACB, which has almost hit the ceiling at 30%, the new foreign room at VPBank is at 15%, Techcombank is 22.5%, HDBank is 21%, OCB also has 10% remaining, and at SHB, the ownership rate of the house is foreign investment only reached 4%.
Accordingly, there are still many gaps waiting for foreign investors to fill. But unlike the previous period, this time banks are very careful in choosing partners.
This is reflected in the number of cooperation deals between Vietnamese banks and foreign partners in recent years. In 2020, OCB completed the sale of 15% shares to Aozora Bank (Japan) and MB privately issued more than 64.3 million shares to eight foreign investors, HDBank offered convertible bonds to DEG (Virtue). In 2019, only two deals were recorded: Vietcombank sold 3% of shares to GIC and existing shareholders Mizuho Bank Ltd and BIDV sold 15% shares to Keb Hana Bank.
According to banks, cooperation deals must go through a very long and complicated negotiation process. For example, in the deal to sell 15% of OCB’s charter capital to Aozora Bank, Mr. Trinh Van Tuan said that before selling shares to Aozora Bank, the bank had to negotiate for more than two years. Or like at NCB, the plan to sell shares to foreign investors has been approved since 2017, but so far has not achieved results.
According to the provisions of Decree 01/2014/ND-CP, the share ownership ratio of a foreign strategic investor must not exceed 20% of the charter capital of a Vietnamese credit institution and the total percentage of shares owned by a foreign strategic investor must not exceed 20% of the charter capital of a Vietnamese credit institution and the total share ownership ratio of all foreign investors in a domestic credit institution must not exceed 30% of the capital.
Meanwhile, Decree 155/2020/ND-CP guiding the Law on Securities takes effect from the beginning of 2021, which stipulates that public companies whose industries are restricted by foreign investors may decide by themselves the maximum foreign ownership ratio lower than the prescribed ceiling. This ratio must be approved by the General Meeting of Shareholders and specified in the company’s charter.
Accordingly, increasing the attractiveness to foreign investors, many banks have chosen to “lock” foreign room to retain part of the foreign ownership ratio for strategic investors.
Specifically, the 2021 AGMS of SHB approved the foreign strategic investor’s ownership ratio in SHB to be no more than 20% of charter capital and fixed the foreign ownership ratio of SHB.
Vietnam’s securities depository is 10% to search and select strategic partners.
Similarly, Techcombank also locked foreign room at 22.5%, VIB at 20.5%. HDBank also adjusted the room from 30% to 21.5%; VPBank decreased from 22.77% to 15%.