BIDV agreed to form a Russian connection

BIDV and Russian-owned Vneshtorgbank have until the end of the third quarter to establish a $30 million joint venture

Last week approval was given but bore a deadline for involved parties to submit their proposals for the establishment of the joint venture within the third quarter of this year.
The document also designates the State Bank of Vietnam and related agencies as responsible for handling financial issues arising from capital contribution by the BIDV as part of a broader proposal to allow the bank to increase chartered capital.
Accordingly, the BIDV will join with the second-largest Russian bank, Vneshtorgbank, to found the Viet-Nga joint venture.
The proposed bank will become the largest banking joint venture in Vietnam in registered capital terms.
BIDV will hold a 51 per cent stake, with all capital to be contributed within three years. The joint venture will open office in Russia in the near future.
The joint venture will provide banking, remittance, mandated investment and credit services to Russian investors in Vietnam, as well as for Vietnamese traders and investors in Russia.
Le Dao Nguyen, BIDV deputy general director, said the bank would take advantage of traditional markets in Russia and other Eastern European nations, ensuring they become an important market for expanded operations.
“The joint venture will open its first office in Vietnam to facilitate business and lay milestones for businesses in Russia before opening office in Russia,” said Nguyen.
He said the bank was preparing legal documents for the establishment, but it still needed a circular to provide guidance for the anti-money laundering governmental decree.
The joint venture memorandum of understanding was signed between the two parties in Danang last May to outline establishment of the $30-million chartered capital joint venture bank.
The partners plan to sign a joint venture contract in July, finish drafting license documents to acquire a licence from local governments in September, and open the first branch in Hanoi this November, with the participation of the Russian president who is expected to be in Vietnam to attend the APEC meeting.
This is also the largest project BIDV has embarked upon, having already participated in the Vid-public Bank with registered capital of $20m and operation of a large number of joint ventures with companies based in Laos.
Vneshtorgbank is one of the leading universal Russian banks, and the largest in terms of authorised capital. As of June 30, 2005 according to international financial reporting standards, IFRS, its shareholder equity totalled $2.7 billion, enabling Vneshtorgbank to meet the Basel capital adequacy requirements with a safe margin. The assets of the bank as of June 30, 2005 were valued at $22bn.
Banker magazine ranked Vneshtorgbank 185th among the world’s 1,000 largest banks by capital.






No. 774/August 14-20, 2006