BIDV proposes shareholders to approve stake sale to KEB Hana

Vietnam’s largest lender in terms of assets, BIDV (HSX: BID), which is 95.28 per cent owned by the state, has asked shareholders on Tuesday to greenlight the private placement of 603.3 million BID shares, equivalent to 17.65 per cent of the lender’s current charter capital and 15 per cent following the issuance, to KEB Hana Bank, a subsidiary of Hana Financial Group (HFG). The expected timeline of the sale is 2018-2019.

In an interview with VIR in September, BIDV chief economist Can Van Luc said that the negotiation of the deal has taken too long – in fact, it has been going for the past two years, and it is now time to seal it. “It [the deal] should be finalised by the end of this year.”

If the deal goes through, KEB Hana will be the first foreign shareholder in BIDV. Photo: Dung Minh

While the slow progress was said to be due to the long wait for the State Bank of Vietnam’s approval, a source close to the deal also revealed that the two parties have been working really hard to turn the deal into reality.

Previously, BIDV was known to actively seek for strategic foreign investors, which is evident in the past proposals made at annual general shareholders’ meetings. This is part of BIDV’s attempt to enhance its finances and strengthen its capital adequacy ratio in line with Basel II requirements. Its foreign ownership limit (FOL) was set at 30 per cent and the bank does not have any strategic foreign shareholders on board at the moment.

Should the transaction go as scheduled, the state holdings will be reduced to 80.99 per cent, with KEB Hana becoming the bank’s only foreign strategic shareholder (15 per cent) and the remaining 4.01 per cent belonging to other non-state shareholders. BID’s new charter capital would then add up to VND40.22 trillion ($1.74 billion).

In an official dialogue with HFG chairman and CEO Kim Jung Tai in Hanoi on January 5, Deputy Prime Minister Vuong Dinh Hue called on the group to boost investment into the local banking and financial sector.

With the restructuring of the banking sector being in focus in Vietnam this year, the participation of the Korean financial institution would not only help expand its business, but also promote business opportunities in fintech and mobile payments, as well as credit services in the country.

According to Michael D.C. Choi, deputy general director of the Korea Trade-Investment Promotion Agency (Kotra), Korean investors are actively seeking for opportunities to specifically invest in local fintech companies, as well as the Vietnamese banking sector.

Choi said that Korean investors and those from other markets see “a huge potential for fintech companies to grow in this country” and take advantage of 70 per cent of the population that is still unbanked and where at least half of the population has access to the internet.

This could be good news for the local fintech community, as Choi revealed that there are currently several deals in the making by major Korean financial institutions, including Shinhan Bank, KEB Hana Bank, and others.

“They are studying opportunities for investment in local fintech companies,” said Choi.

HFG’s subsidiary, KEB Hana Bank’s Ho Chi Minh City branch, in March received the central bank’s approval to double its charter capital from $35 to $70 million.