Foreign investors closely eye banks
28-AUG-2008 Intellasia | 26/Aug/2008 Thoi Bao Kinh Te Vietnam
Aug 28, 2008 - 7:00:00 AM
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That some bank shares have sharply increased over the last time is making the investor circle surprised. However, many financial experts are still doubtful about such a move.
Vietnam's economy has not yet overcome shocks of galloping inflation, high interest rates as well as risks of the banking system. Even when liquidity of banks has been temporarily recovered, this does not mean that the hardest time of the banking system has passed.
Most of financial statements of banks in the first quarter still reported high profit, which has not yet exactly reflected their current business situation. Because many banks said that they still met various difficulties in both raising deposits and offering loans.
However investors in the stock market are seemingly putting high expectations on recovery of banks.
A series of good news about some domestic banks have been released over the last days. Namely, a series of foreign banks have become strategic shareholders of domestic banks. Some 10 domestic banks have sold shares to foreign banks.
Notably, the Hong Kong and Shanghai Banking Corp (HSBC) holds 20% of the Vietnam Technological Commercial Joint Stock Bank (Techcombank), the largest stake among foreign banks that acquire stake of domestic banks at present time. Additionally, Maybank acquires 15% of the An Binh Commercial Joint Stock Bank (ABBank)'s stake, Deutsche Bank buys 10% of stake of the Hanoi Housing Bank (Habubank), Societe generale acquires 10% of stake of the Southeast Asia Bank (SeABank), ANZ owns 10% of stake of the Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Sumitomo Mitsui Financial Group (SMFG) buys 15% of stake of the Vietnam Export and Import Commercial Joint Stock Bank (Eximbank).
Most of news failed to explain history and situations of such stake transfer deals. Firstly, it should be confirmed that most of foreign banks that acquire stake of domestic banks have long-term strategies on utilising existing services systems, networks and employees of domestic banks as a momentum for their future development in Vietnam.
For example, Deutsche Bank buys Habubank's stake, aiming to develop retail services in Vietnam while HSBC plans to cooperate with Techcombank to develop its ATM system and consumer credit.
Because those trading deals had been negotiated for long time, when all sides completed stake trading deals and made public the deals, the market changed very much.
At the hardest time of banks by early July, many people were surprised when SMFG announced that it acquired stake of Eximbank at the price of US$225 million, far higher than Eximbank's share price at that time.
Such a move happened to many other banks. With prolonged trading procedures, by the payment time, many strategic investors had to bite the bullet because they paid stake at higher prices compared to current prices of the market.
Foreign banks see Vietnam a good long-term development prospect. Thus, there is no surprise if they continue managing to buy domestic banks.
For instance, BNP Paribas that is now holding 10% of stake of the Orient Commercial Bank (OCB), revealed that the French bank wants to raise its stake ownership ratio at OCB to 20%. Mirae Asset Securities wants to buy 15% of stake of the Southern Bank and Maybank is believed that it will increase its stake ownership ratio at ABBank to 20%.
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