Vietcombank expands bank shareholdings
Source: 25-SEP-2007 Intellasia | 20/Sep/2007 Dau Tu Chung Khoan page 24
Sep 25, 2007 - 7:07:00 AM

Vietnam's financial market is forecasted to see a wave of mergers of acquisitions in the near future, prompting many banks, particularly joint stock commercial banks to race to ally. However, many big banks are also quickly preparing to acquire smaller banks to form large groups. Vu Viet Ngoan, general director of Vietcombank gives his views. Excerpts:

After selling 30% of stake to Vietcombank and Vietcombank Fund (VCBF), the chartered capital of Gia Dinh Bank will increase to 500 billion dong of which 36 billion dong will be auctioned via Vietcombank Securities Co (VCBS). It is scheduled that Gia Dinh Bank's chartered capital will rise to one trillion dong in 2008. In addition to individual shareholders, to date, Gia Dinh Bank has so far had 14 shareholders being legal entities including Vietcombank, Industrial and Commercial Bank of Vietnam (Incombank), Saigon Commercial Joint Stock Bank (Saigonbank), Eastern Asia Bank (EAB), Export and Import Commercial Bank (Eximbank), Asia Commercial Bank (ACB), Hanoi Housing Development Bank (Habubank), Vietnam International Bank (VIBank), and Pacific Joint Stock Bank.

What are the specific contents of the cooperation deal between Vietcombank and Gia Dinh Bank?

This deal starts the long-term and comprehensive cooperation project between Vietcombank and Gia Dinh Bank. This time, Vietcombank contributes 11% and VCBF contributes 19% into Gia Dinh Bank. Under this cooperation deal, Vietcombank will help Gia Dinh Bank improve management capacity and financial capacity by providing Gia Dinh Bank technical assistance in different fields like banking management, retail and wholesale banking services, risk management, information technology, human resources. The technical assistances will be designed to help Gia Dinh Bank promote its competitive capacity in Vietnam market.

Many people said that acquiring 30% of stake of Gia Dinh Bank is simply to control this joint stock bank. Is that the case?

Vietcombank is undergoing restructuring and reforms, thus, the bank plans to expand operation scale as well as promote financial capacity. In my opinion, in order to well compete to revivals on the financial market which is opening wider door to well come foreign banks, the best way for domestic banks is building strong alliances. On the other hand, in order to build a strong transaction network, cooperation should be always put on the top priority. Nevertheless, as for Gia Dinh Bank, it is still too early for use to think of acquiring or merging Gia Dinh Bank although Vietcombank has considered comprehensive strategic steps. In short-term, we are only thinking of cooperation, mutual assistance during development. Gia Dinh Bank is a bank of small scale, hence, it still has great potentials for development. We believe that with this investment, Vietcombank will gain high profit.

Does Vietcombank have strategies to buy into other joint stock banks given the rising trend of M&As in Vietnam?

I think that in several next years, Vietcombank will also have to consider M&A for some banks because amidst Vietnam's growing financial market, many big banks will become stronger. Besides, some small banks will find hard to eliminate difficulties when the M&A booms. This is the competition rule of the market. Thus, for the sake of all sides, alliance or M&A should be taken into account. We are building our own strategies.

How many joint stock banks does Vietcombank have shareholdings and what are your future plans?

Vietcombank has invested into nearly 10 banks including Eximbank, VIBank, Orient Commercial Bank (Oricombank), Military Bank and others. In the forthcoming time, Vietcombank will restructure and reconsider investment portfolio in order to focus on some banks in order to make great strides for those banks as well as Vietcombank itself. Therefore, in addition to Gia Dinh Bank, Vietcombank will ally with many other joint stock banks in the near future.