Small-scaled banks sprint to list on the UPCoM

19-Sep-2020 Intellasia | Dau tu Chung khoan | 6:02 AM Print This Post

The scheme on “Restructuring the stock market and insurance market to 2020, with a vision to 2025″ approved by the prime minister at the end of February 2019 pointed out a series of solutions to restructure the market. In which, the compulsory listing of commercial banks is one of the measures to diversify the commodity base on the market

Specifically, the Scheme requires all commercial banks to list shares on the HCM City Stock Exchange (HoSE), Hanoi Stock Exchange (HNX) and register for trading on the Unlisted Public Company Market by the end of 2020.

In fact, the “listing” requirement for bank stocks was set out earlier at the Banking Industry Development Strategy to 20205, with a vision to 2030 which was approved by the prime minister in August 2018.

At the same time, according to Circular 180/2015 of the Ministry, banks are required to register their shares on the UPCoM by the end of 2016.

The State Bank of Vietnam (SBV) and the State Securities Commission (SSC) also repeatedly issued official document to remind banks about the policy and roadmap to list their shares on the stock exchanges in the previous years.

Under this pressure, small and medium-scaled banks have quickly completed procedures to register their shares for trading on the UPCoM.

Recently, Saigon Commercial Joint Stock Bank for Industry and Trade (Saigonbank) and Nam A Commercial Joint Stock Bank (NamABank) have been the most mentioned names as they will register to trade shares on the UPCoM in 2020, following Viet Capital Commercial Joint Stock Bank (BVB).

Out of the 308 million SGB shares of Saigonbank which have been approved by the HNX to register for trading on the UPCoM, more than 201 million shares are restricted to be transferred by law.

In which, members of Saigonbank’s Board of directors (BOD) hold nearly 151 million shares, equivalent to 48.9 percent of the bank’s charter capital add nearly 50.4 million shares, equivalent to 16.35 percent of the bank’s charter capital are owned by Ky Hoa Tourism and Trading One Member Limited Liability Company.

In addition, Vietnam Securities Depository (VSD) said that NamABank has registered for trading NAB shares on the UPCoM. Accordingly, more than 389 million NAB shares have been registered at VSD with an equivalent registered value of over 3.890 trillion dong.

At the same time, VSD has also announced the maximum foreign ownership rate of NAB stock code at 30 percent of charter capital. The largest shareholder of NamABank is currently Pacific Dragon Company Limited with nearly 11 percent of ownership rate, and there is no major foreign shareholder.

Previously, some banks also put their shares for trading on the UPCoM in the third quarter of 2019, such as Bac A Commercial Joint Stock Bank (BacABank, stock code: BAB), Kien Long Commercial Joint Stock Bank (Kienlongbank, stock code: KLB), Vietnam Thuong Tin Commercial Joint Stock Bank (VietBank, stock code: VBB); and most recently VietCapitalBank (BVB) which officially traded shares on the UPCoM on July 9th 2020.

However, some banks in the financial market have not made any moves to their listing plans, such as Bao Viet Commercial Joint Stock Bank (BaoVietBank), Viet A Commercial Joint Stock Bank (VietABank), although the bank repeatedly mentioned about its listing plan at the annual general meetings (AGMs).

In addition, Petrolimex Group Commercial Joint Stock Bank (PGBank) is in the process of merging into HCM City Development Commercial Joint Stock Bank (HDBank). In addition, three weak banks including Construction Bank (CBBank), Ocean Bank and Global Petro Bank (PGBank) as well as Dong A Commercial Joint Stock Bank (DongABank) which is under special control, can hardly bring their shares to the exchange in the near future.

Thin capital

Saigonbank is the first joint stock bank to be established in the group of private joint stock banks in Vietnam in 1987 with an initial charter capital of 650 million dong.

In 2014, Saigonbank had a plan to increase charter capital to four trillion dong, and it was approved by the SBV in 2016.

Nevertheless, this plan has not yet implemented and the charter capital of 3.080 trillion dong has been maintained from 2012 up to now.

It seems that Saigonbank is still standing still and has not made any move for its capital raising plan in the near future when the reports at the recent 2020 AGM also did not mention about the plan to increase charter capital.

However, since the capital adequacy ratio (CAR) of Saigonbank as of June 30th 2020 was 19.32%, it has no problem maintaining the CAR as required.

However, there are statements that it is difficult for Saigonbank to avoid the mergers and acquisitions (M&A) wave in the near future when the restructuring process is accelerated if it is unable to increase charter capital to improve financial capacity.

In addition to the inability to raise charter capital, Saigonbank also suffered continuous capital withdrawals of shareholders. Specifically, in November 2017, Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) auctioned 13.2 million SGB shares at an average successful price of up to 20,100 dong per share. In March 2019, Commercial Joint Stock Bank for Industry and Trade of Vietnam auctioned more than 15 million SGB shares, equivalent to a ratio of 4.91 percent and collected more than 305 million dong.

Recently, at the beginning of 2020, Viettronics Bien Hoa Joint Stock Company (Belco) registered to fully sell nearly 1.5 million SGB shares, equivalent to 0.49 percent of charter capital.

VietABank has also been unable to increase charter capital for many years. However, recently, the SBV has approved the bank to increase charter capital from 3.5 trillion dong to five trillion dong.

Meanwhile for VietCapitalBank (BVB), after many years maintaining the same charter capital level, on August 26th, the bank held an extraordinary general meeting to approve the plan to increase charter capital to more than four trillion dong.

Accordingly, VietCapitalBank will split the plan into two phases. In the first phase, the bank will issue more than 35.2 million shares to existing shareholders at a ratio of nine percent, and issue 15 million shares under Employee Stock Ownership Plan (ESOP). In the second phase, 40.4 million shares will be issued for existing shareholders at an expected ratio of 11%.

After the two phases, VietCapitalBank’s charter capital is expected to reach more than 4.077 trillion dong. The implementation time is in 2020 and the first quarter of 2021.

Many banks have no foreign ownership. Up to now, there is no participation of foreign investors at BVB, and hence its foreign ownership room is fully available.

As of December 31st 2019, the shareholder structure of BVB only recorded one major shareholder owning more than five percent of the bank’s stake: Saigon New Urban Investment Joint Stock Company with 12.89 percent ownership rate.

Meanwhile, the bank’s management board is holding 51,547,663 shares, equivalent to 16.26T of the bank’s stake.

At Saigonbank, as of May 29th 2020, the biggest shareholder of the bank is the People’s Committee of HCM City with 18.18 percent ownership; followed by Phu Nhuan Construction and Housing Trading Limited Company with 16.64 percent ownership rate, Ky Hoa Tourism and Trading One Member Limited Liability Company with 16.35%, Saigon Petro One Member Company Limited with 14.08%. These four units are holding 65.25 percent of the charter capital of Saigonbank.

As of May 2020, the ratio of foreign ownership at Saigonbank was 4.997 percent of charter capital, equivalent to nearly 15.4 million shares. Thus, there is much room for foreign investors at Saigonbank

The current ownership room for foreign investors at NamABank is still fully available at 30%. NamABank has had many negotiations with partners to soon successfully mobilise capital before listing its shares on the HoSE.

It is known that in the plan to raise charter capital from five trillion to seven trillion dong this year of NamABank, the bank will attract more capital from foreign investors.


Category: Finance, Vietnam

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