UK bank SCB wins out in bidding for ACB stake

ACB’s newly appointed general director, Ly Xuan Hai, confirmed to Vietnam Investment Review last week that the British bank had agreed to buy 56,180 ACB shares for VND6.2 million ($394) each, more than six times the par value of VND1 million. The total value of the deal is over $22 million.
SCB, which now operates a branch in Hanoi and a representative office in Ho Chi Minh City, beat four other foreign banks in the deal: Citibank, ANZ, Hong Kong and Shanghai Banking Corporation (HSBC), and the Development Bank of Singapore (DBS). Price was not the major factor in SCB’s victory, Hai said.
“What’s more important is that SCB has a business culture and development strategies in line with ours, and is able to comprehensively assist us in developing banking technologies and services,” he said.
By investing in ACB, SCB becomes the fourth foreign financial institution eligible to sit on the local bank’s management board, joining World Bank’s International Finance Corporation (IFC), which currently holds a 7.3 per cent stake, Connaught Investors of Jardine Matheson Group at 7.3 per cent, and Dragon Financial Holdings Ltd at 6.84 per cent.
Foreign ownership at ACB has reached its cap of 30 per cent.
Besides equity investment, SCB has formed a strategic alliance with ACB to exploit the strengths and competitive edges of one another. As part of the alliance, SCB will provide technical assistance in the areas of risk management, retail and consumer banking, human resource management, branding, and distribution.
Kai Nargolwala, group executive director of wholesale banking at SCB, said his bank viewed investment in ACB as an ideal platform to expand its presence in the rapidly growing Vietnamese consumer banking sector.
“ACB is one of the premier banks in the country, and its growth and development will benefit both customers and the banking industry in Vietnam. We believe our global expertise and experience in Asia will provide a strong complement to support these objectives,” he said.
ACB chairman Tran Mong Hung said: “We are delighted to have SCB as our strategic shareholder. We will leverage the strengths of SCB to drive growth of ACB for the benefit of our stakeholders, customers and society. We will work with SCB to enhance our product range, services and delivery standards to become the best retailing bank in the country.”
With the deal, ACB’s equity capital increases to nearly VND950 billion ($60.5 million) from VND600 billion ($38.2 million), solidifying the bank’s second-place position among joint-stock commercial banks. Sacombank leads the way with equity capital of more than VND1 trillion ($63.6 million).
ACB is one of the few joint-stock commercial banks in Vietnam rated by State Bank of Vietnam as a Grade-A institution, a distinction it has held for many years due to its large assets and leading customer service. The bank also has a low overdue debt rate (only 0.75 per cent of the bank’s total debt), a reliable credit policy, a healthy financial structure, and a respected training programme for staff.
At VND143 billion ($9.3 million), ACB recorded the highest profits among joint-stock commercial banks in the first five months of the year, a year-on-year increase of 40 per cent. The figure is expected to be VND370 billion ($23.5 million) by the end of this year.
Its total assets were reported at VND17.6 trillion ($1.1 billion) as of May 31, an increase of 14 per cent compared with early January. The bank plans to increase its total assets to VND20.5 trillion ($1.3 billion) by the end of this year and VND65 trillion ($4.1 billion) by 2010.