The largest state-owned Vietcombank will have to complete the signing of the contract engaged in hiring one international consultancy company by February 2006 at latest to ensure the issuance of the bank’s shares to the public in 2006, prime minister Phan Van Khai ordered recently.
The State Bank of Vietnam’s national steering committee for equitisation of Vietcombank held a conference on November 10 on conducting some ‘stimulant’ tasks to boost the privatisation of this bank.
This conference tabled about planning and defining some urgent tasks that should be immediately conducted in order to solve complexities, many contents and delays in the equitisation of Vietcombank.
The national steering committee recognised that the top first task is checking and classifying assets of all kinds and settling financial issues of Vietcombank at the time of December 31 this year before one international consultancy company makes valuation of its assets. With this content, Vietcombank must closely work with the special working group of the SBV’s national steering committee to boost the implementation of this according to the prevailing regulations.
The national steering committee also requested that right this month November, Vietcombank will have to completely guide its entire network about the government’s equitisation guideline, legal documents engaged in the equitisation, especially all the contents involved in checking and classifying assets and financial settlements before the definition of it’s value.
With regard of the plan to hire international consulters to help equitise Vietcombank, the national steering committee identified that the content of hiring international consulters is rather broad, including the definition of Vietcombank’s value, analysing and assessing the bank’s business performance (by November 31 this year), building the roadmap for raising capital and selecting foreign strategic investors, and building the official equitisation scheme and organising Vietcombank’s first share issue within 2006.
Up to the present, the national steering committee has passed the plan to select international consultants based on the proposal of Vietcombank, of which clarifying all phases must be concluded and then sent to the national steering committee for subsequent forwarding to the SBV and the Ministry of Finance. The SBV and the MoF will then choose one international consultancy firm and Vietcombank will have to directly negotiate and sign a consultancy deal with this selected firm.
On November 3, a seminar on the equitisation of Vietcombank, especially issues involved in hiring a international consultancy firm and selection of strategic investors was held in Hanoi by VinaCapital and attended by more than 20 local and foreign financial specialists.
The office of the SBV said that the national steering committee for equitisation of Vietcombank will soon issue a specific plan to pilot equitise Vietcombank as a basis to boost the equitisation of the whole state-run banking system in the near future.
With regard to Vietcombank’s convertible bond issue, the SBV’s banking development strategy department will have to finalise the issuance scheme to raise chartered capital for submission to the finance ministry for approval within this month, November.
Another source said that the national steering committee for equitisation of Vietcombank is currently considering to choose one of three bond issuance methods: auctioning bonds, issuing bonds via registration at a fixed coupon, or organising an auction of bonds for entities according to a fixed annual coupon and selling a part of the bonds to individual investors according to their registration and offer price that is struck at the auction.
Of which, the third method might be the final one to choose for Vietcombank’s convertible bonds issue because it has received the most support from banking specialists.
According to Vietcombank’s latest financial report on October 24, the bank so far this year has recorded over two trillion dong in pre-tax profit, a year-on-year increase of over 25%. “ This is the highest profit level the bank has ever earned,” said Vu Viet Ngoan general director of Vietcombank.
By the end of September this year, total assets of Vietcombank had booked 130 trillion dong, up 9% over the year earlier period. Vietcombank’s non-performing loan (NPL) ratio is now less than 3% of its total outstanding loan balance, according to local calculation standards.