Local banks too shy to court new partners

BIDV is determined to press ahead with its equitisation plan this year

Western Bank general manager Dang Duc Toan said it would be hard for his bank to sell its stake to foreign strategic partners this year as foreign banking institutions were also coping with post-financial crisis difficulties.

“This time is not right for us to find foreign strategic partners, thus we will sell our stake at a more appropriate time when Vietnam’s securities market is on a better footing,” he said.

Meanwhile, Dong A general director Tran Phuong Binh said the bank’s managers had held talks with potential partners over the years but were yet to find suitable partners.

“We have asked shareholders to allow us to continue talking with potential partners and we will officially request approval once we find the most suitable one,” said Binh.

To date, only 12 of the 37 commercial joint stock banks have sold stakes to foreign institutions.

The country has three foreign banks holding 20 per cent stakes in local commercial banks, the maximum ratio that a foreign bank can hold in a local bank. These are HSBC, Société General and MayBank with holdings in Techcombank, SeAbank and ABBank, respectively.

Foreign banks holding a 15 per cent stake in commercial joint stock banks include BNP Paribas, UOB, Commonwealth and OCBC, all of which are waiting for government approval to increase their holdings to 20 per cent.

Trinh Van Tuan, OCBC general director said the bank was waiting for the central bank’s approval to sell an additional 5 per cent stake to its strategic partner BNP Paribas to raise its chartered capital to VND3 trillion ($144.9 million) this year.

Meanwhile, two of the last remaining state-owned banks in Vietnam, the Housing Bank of Mekong Delta and BIDV, will forge ahead with equitisation plans this year.

Both banks will submit their short list of foreign strategic partners this year with BIDV planning to provide a shortlist of foreign strategic partners to the government in the third quarter.

The central bank’s Circular No.10/2011/TT-NHNN, issued on April 22, 2011, sets out criteria for choosing strategic partners for state-owned commercial banks during equitisation.

Under the conditions of the circular, foreign strategic partners must be financial institutions with total assets valued at a minimum of $20 billion a year before the deal takes place.

They must also have at least five years operation in the international arena and be ranked by an international rating institution such as Moody’s, Standard & Poor’s or Fitch Ratings.

The foreign strategic partner will not be allowed to sell its stake within five years.