ANZ bank buys into Sacombank

ANZ will offer Sacombank a great deal of technical help

Sacombank chairman Dang Van Thanh told Vietnam Investment Review last week the Australian bank had agreed to pay over $27 million in the deal, far more than competing bids from Hong Kong and Shanghai Banking Corporation (HSBC), Citibank, Standard Chartered Bank and the Development Bank of Singapore (DBS).
ANZ offered Sacombank VND34,000 ($2.16) per share, much higher than the listed value of VND10,000.
But price was just a minor aspect of the deal, said Thanh.
“What’s important is that ANZ has development strategies in line with ours, and it will be able to assist us in developing banking technologies and operations,” he said.
“Actually, we need a good foreign bank to improve our services and risk management,” he added.
The deal makes ANZ the third foreign financial institution eligible to sit on Sacombank’s management board, joining British fund management company Dragon Capital and the World Bank’s International Finance Corporation (IFC), each of which holds a 10 per cent stake.
In addition to the equity investment arrangement, ANZ and Sacombank bank were forming a strategic alliance, Thanh said.
As part of the alliance, ANZ will provide technical assistance in the areas of risk management and retail and small business banking, while Sacombank will work with ANZ to leverage its growing consumer and small business franchise, which includes 92 branches and 18 ATMs, currently the largest network in Vietnam.
Elmer Funke Kupper, managing director of ANZ Group’s Asia Pacific region, said his bank viewed the investment in Sacombank as a good platform from which to expand its presence in the rapidly growing Vietnamese banking sector.
He also said if the rules were changed so that foreign investors could own more than 30 per cent of a Vietnamese joint stock institution, then ANZ’s investment could possibly increase over time.
ANZ was one of the first foreign banks to set up shop in Vietnam, and now has branches in Hanoi and Ho Chi Minh City and a representative office in the Mekong Delta capital of Can Tho. It has $20 million in registered capital.
Established in 1991 following the consolidation of four credit institutions in Ho Chi Minh City, Sacombank is now the largest joint stock commercial bank in Vietnam in terms of capital and network.
The Ho Chi Minh City-based bank has registered capital of VND740 billion ($46.9 million), and plans to increase this to VND1.25 trillion ($79.2 million) by the end of this year.
Its total assets jumped 42.4 per cent to VND10.4 trillion ($659 million) last year from VND7.3 trillion ($465 million) in 2003, and its overdue debts stood at 1.07 per cent of total outstanding loans.
It also plans to raise pre-tax profit this year by 40 per cent from last year to VND280 billion ($17.83 million).
Sacombank has already filed to list its shares on the Vietnamese stock market.
It expects to become the first bank to be traded on the country’s bourse, with a listing slated for the third quarter of this year.
“Sacombank itself has met all listing requirements for a joint stock bank,” said Thanh.
“We believe we’ll get the nod to trade our shares on the stock market this year as the central bank and the State Securities Commission are trying to let healthy banks list,” he added.