Sunday, 26 May 2019

Banks consider luring foreign investment after restructuring completion

Updated at Tuesday, 19 Jun 2018, 08:00
The Hanoitimes - Foreign investment inflows in Vietnam’s banking industry are increasing significantly, however, merged or acquired banks said they will consider selling stakes to foreign investors just after finishing the painful restructuring to make the sales more attractive.
According to Le Anh Tuan, Chief Economist of the Research Division of Dragon Capital Group, the reason why investors are interested in pouring capital into Vietnamese banks is because this is the lifeblood of the economy while banking operations are recovering. 
SCB will consider selling shares in 2019 after finishing the restructuring
SCB will consider selling shares in 2019 after finishing the restructuring
Banking expert Can Van Luc said Vietnamese banking sector now is getting much better than the previous time, so the fact that foreign investors are interested in is understandable.
However, after mergers and acquisitions (M&As), banks such as SCB, Sacombank, SHB and Maritime Bank said that they are now focusing on promoting the restructuring and will seek foreign strategic investors after completing the restructuring. 
The banks expected that strategic shareholders with long-term commitments will participate in the banks’ governance to help them improve technology and quality for sustained growth.
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Do Quang Hien, chairman of Saigon-Hanoi Bank (SHB), said that many foreign investors are interested in buying SHB’s stakes. However, SHB affirmed that it would be cautious about finding out shareholders which really has long-term investment demands and could support the bank in enhancing the governance.
SHB’s board of directors wants foreign strategic shareholders to be economic entities that have long-term investment demand as well as clear management and governance policies to participate in the bank’s governance and support it in technology to ensure the bank’s sustained development. 
The bank expects to partner with financial groups and foreign investment funds to accelerate the retail segment, exploit capital sources and invest in Vietnamese projects and businesses, Hien said.
“This strategy will set the stage for SHB to make a breakthrough in 2018 and the following years, facilitating profit and revenue growth,” the chairman added.
The same move is also seen at Saigon Commercial Bank (SCB). CEO of SCB, Vo Tan Hoang Van, said after the restructuring process, his bank’s financial situation is remarkably improved as it accelerated bad debt settlement and cleaned the balance sheets. 
Though the current profit must be reserved to put for risk provision, SCB accumulated good finance after the restructuring process in the post-merger period with Tin Nghia Bank and Ficombank in 2011. SCB’s provisioning fund currently reaches nearly VND7 trillion (US$307 million). 
SCB will consider selling shares in 2019 after finishing the restructuring, Van said, adding that the calling for foreign investment next year would bring more advantages for SCB than currently thanks to the bank’s improved business performance.
According to banking experts, it is reasonable for some merged or acquired banks to be cautious and wait for good opportunities to find foreign partners as well as to target strategic partners. 
The experts explained, after M&A, it will take the banks several years to recover as they have been paying for bad debts. The banks then will become stronger after finishing the restructuring, which will help them easier to find good strategic investors.
Tran Du Lich, member of the National Council for Finance and Monetary Policies, said that the revamped banks need to enhance their strength through supports from strategic partners. However, they should be cautious in finding investors as foreign inflows to Vietnam’s banks are increasing but mainly short-term investment, which won’t help them enhance governance and improve technologies.
Thao Le
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