BIDV pushing ahead with promised 2011 IPO

BIDV is four years behind its initial equitisation schedule

BIDV’s equitisation plan is now with the State Bank and relevant ministries for processing.

It seems the state will keep its capital in BIDV at the current level with shares being issued to raise the bank’s charter capital.

The state will hold the majority stake of 80 per cent, while shares equivalent to 15 per cent will be issued to foreign strategic and financial institutional investors. One per cent will go to staff, 1 per cent to the bank’s trade union, and  3-5 per cent will go out to other shareholders via an initial public offering (IPO).

“BIDV is carrying out a corporate evaluation, building its IPO plan and setting out criteria for choosing foreign strategic investors,” said BIDV chairman Tran Bac Ha.

The IPO will be conducted simultaneously with the selection of foreign strategic investors in 2011. Once it has the government go ahead for equitisation, the bank will complete its evaluation reports and select its foreign strategic investors with the support of Morgan Stanley.

BIDV expects to complete the legal formalities and be converted into a commercial joint stock bank in the first quarter of 2012.

“The fourth quarter this year is favourable time for BIDV’s IPO.  The State Bank’s determination to bring interest rates down would create short-term growth for the economy and the stock market,” said Dao Viet Truong, chief analyst of Hanoi Securities Company.

Truong added that BIDV was one of the five largest state-owned commercial banks in Vietnam and had good relationships with big enterprises in the country.

According to the bank’s audited fiscal report in 2010, BIDV’s total assets stood at VND366.27 trillion ($17 billion), while chartered capital was VND14.6 trillion ($705 million) and pre-tax profit came in at VND4.6 trillion ($223 million).

Nguyen Quang Huy, equity analyst of Thang Long Securities said BIDV’s financial strength was valued to be lower than that of Vietcombank and Vietinbank, the two banks equitised previously, especially after the debt-ridden Vinashin scandal. However, he noted that the market situation had gradually improved with the trend towards lowering inflation and interest rates.

“In addition, State Bank has strictly forced banks to apply the 14 per cent ceiling deposit rate for the Vietnam dong which could make people not save their money and invest in the stock market instead,” said Huy.

BIDV is four years behind its initial equitisation schedule and will be the fourth state-owned commercial bank in Vietnam to equitise following Vietcombank, Vietinbank and Mekong Housing Bank. Agribank will become the last bank standing not to have a clear equitisation plan.