OCBC to buy into VPBank

VPBank is the fourth joints stock bank selling shares to foreign banks

The State Bank’s approval was given last week, more than five months after OCBC signed an initial agreement with VPBank, pursuant to which it would purchase a 10 per cent stake for VND250 billion ($16 million).
According to Le Dac Son, VPBank chief executive officer, OCBC would become a strategic partner with a seat on the VPBank’s board of directors. OCBC has committed to support the local partner in training personnel, improving risk management methodologies and upgrading information technology.
The bank chief also said that after signing the agreement in March, OCBC had sent experts to Vietnam to survey VPBank’s operations. The team also conducted market research to assess potential for development of credit card services, the stock market and insurance.
The information gathered will be used to assist VPBank define a development strategy under an international standard retail banking model.
Previously put under special surveillance by the central bank several years ago, VPBank has upped its business performance and been removed from the black list. Its paid-in capital will be raised to VND500bn ($31.25m) after OCBC’s injection of capital, and is expected to be doubled to VND1 trillion by the end of this year.
Under the partnership, OCBC also has the option to buy another 10 per cent stake in VPBank if the central bank allows a single foreign bank to own such a holding in a local joint stock bank.
At present, a single foreign bank can hold a maximum stake of 10 per cent in a local bank, while combined foreign ownership is restricted to 30 per cent.
With the approval given for VPBank, four of the 54 joint stock banks nation-wide have sold shares to foreign banks.
Earlier, UK-based Standard Chartered Plc paid $22m for an 8.56 per cent holding in ACB. ANZ Banking Group Ltd paid $27m for 10 per cent of Sacombank, and HSBC paid $17.3m for 10 per cent of Techcombank.
Other local joint stock banks, including Eastern Asia Bank (EAB) and Phuong Nam Bank (PNB), are considering new share offerings to foreign counterparts, in order to improve financial capacity and management skills.
In the past, foreign bank branches were not permitted to buy shares in local banks because they were not viewed as foreign investors. However, the central bank has now agreed that foreign bank branches are eligible to become stakeholders.
In order to lure such investors, the central bank is considering lifting the investment cap to 49 per cent, while an institution can hold shares equivalent to a 30 per cent stake in a joint stock bank (instead of the current 10 per cent).



No. 781/October 2-8, 2006