Vietnam banks increase overlap-ownership

The appointment of new general directors of three commercial banks this week has drawn much attention and also implied private ownership transfer in the banking industry.

Maritime Bank (MSB) spent some 220 billion dong on 19 June to purchase additional 15.228 million MBB shares raising the amount of shares at this partner to 94,114,630 shares or 9.411  percent of MBB’s chartered capital.

Likewise, Chair of Eximbank (EIB)’s Management Board Le Hung Dung said at the shareholders’ general meeting 2012 the bank had by far invested more than 1,600 billion dong in Sacombank (STB) and expected to raise the ownership ratio to some 53pct.

Apparently, there has emerged overlapping ownership among commercial banks, which has yet been identified due to their wide range of affiliates and partners.

As of 17 May 2012, Sai Gon-Hanoi Securities Company (SHS), for instance, has held 3.74pct stake in SHB which obtained 8.22pct stake in SHS by the end of last year.

Eximbank’s annual report for 2011 revealed investment in an array of economic entities such as Rong Viet Securities Company (10.86pct), Eximland (10.99pct), Nha Rong Insurance Company (9.45pct), Viet Long Growth Investment Fund (10pct) and Sai Gon Exim (11pct), most of which in turn hold ownership at each other.

Assumingly, who are owners of several banks remain unknown. Though controlling ownership stake at credit institutions is prohibited under the current regulations for fear of hurting shareholders’ interests, any violations could hardly be detected. Moreover, banks’ annual reports appear to be vague about large shareholders and relevant parties which acquire more than 20pct of these entities’ capital. Therefore, requirements on disclosure of individuals and entities grabbing commercial banks’ shares should be further clarified.

 

Category: Finance