Jun 19, 2018 / 10:44

Vietnamese banks struggle to find strategic investors

Many Vietnamese banks subject to mergers and acquisition (M&A) are still in search of suitable strategic investors despite strong foreign appetite for local banking shares.

Outflow and inflow of foreign capital

Last August, HSBC sold its entire 172 million shares in Techcombank back to the Vietnamese lender which bought for treasury shares. With this sale, foreign ownership in Techcombank fell to zero.
 
Illustration photo.
Illustration photo.
In March, global private equity major Warburg Pincus agreed to invest over US$370 million in Techcombank, while Singaporean wealth fund GIC, Dragon Capital and Fidelity Management have expressed intention to become Techcombank's major shareholders. 

Standard Chartered has offloaded its entire 154 million shares, or a 15% stake in Asian Commercial Bank (ACB) to other investors, ending a 12-year strategic alliance between the two parties. Those investors include Estes Investments Limited, Sather Gate Investments Limited, Boardwalk South Limited and Whistler Investments Limited. 

In 2016, the State Bank of Vietnam (SBV) turned a green light for Saigon Commercial Bank (SCB) to sell 50% of the bank's charter capital to foreign investors after four years of undergoing a painful reshuffle. The lender is currently negotiating with six investors, including banks, private equity firms and insurance companies from Norway, Indonesia, Taiwan (China) and mainland China. 

An undisclosed private equity firm has proposed purchasing a 15% stake at SCB, while the bank expects to reach an agreement with two potential investors from China and Indonesia. The deal, therefore, is expected to be completed this year. 

Others banks such as SHB and Maritime Bank have been in the search of foreign investors, but little information has been disclosed so far. 

Different strategies

CEO of SCB Vo Tan Hoang Van tipped the bank expected to issue shares to foreign investors after completing a post-merger restructuring process in 2019. By then, the bank will be in a better position in attracting foreign investors and a potential public listing in the future. 

Similarly, Chairman of Saigon-Hanoi Bank (SHB) Do Quang Hien considered foreign investors to be strategic partners in the long term, for which the searching process would be very important to avoid short-visioned investors. 

Maritime bank, meanwhile, is focusing on going public in 2019. 

According to experts, it is reasonable that banks that have undergone M&A take a cautious stance on the search of strategic investors. Most banks after M&A will have to deal with bad debts and see a reduction in profit, which may take them a few years for full recovery and return to profitability. Only when banks complete the post-merger restructuring process can they have a strong foundation for steady growth and development. Demands to become strategic investors of those banks will come naturally.