Citibank sets up share acquisition

Foreign banks are moving in on the banking sector

The memorandum, signed last week, was expected to open the gates for Citibank to buy shares in the Ho Chi Minh City-based bank. The move would make Citibank the first US bank to buy shares in a joint-stock bank, but the fifth foreign bank alongside ANZ, HSBC, OCBC and Standard Chartered Bank.
“This is known as a ‘strategic allowance’ to sign an official relationship between the two banks; the share purchases will depend on their [the banks] willingness,” a State Bank official said. However, a deputy governor of the central bank was present to provide guidelines to the bank.
According to the memorandum, Citibank will provide training courses in consumer lending and enterprise banking to EAB staff.
The EAB will also connect its Vietnam Bank Card (VNBC) to Citibank’s global network. The VNBC has 1,000 acceptance points and 400 ATMs.
EAB director Tran Phuong Binh said the cooperation would help the local bank to provide new financial services to local residents and enterprises.
Ashok Vaswani, CitiGroup consumption banking group general manager, said Vietnam was a top priority for CitiGroup.
EAB has a chartered capital of VND600 billion ($37.5 million), which it plans to increase to VND880bn ($55m) later this year. At the end of 2005, the bank’s total assets were worth VND8.5 trillion ($532.2m).
The Singaporean-based OCBC was the first foreign bank to sign a strategic partner agreement in Vietnam, which will double its stake in VPBank to 20 per cent once the government allows it to raise its ownership ratio. OCBC is also providing training courses in consumer lending, cards, risk management and information technology.
Techcombank shareholders last month approved the sale of an additional 10 per cent share to HSBC, subject to government approval, making HSBC the second foreign strategic partner of a local bank.
Nguyen Duc Vinh, general manager of Techcombank, said approval was the first step for the two sides to begin detailed discussions of price and other conditions before signing a strategic partner agreement.
Earlier, UK-based Standard Chartered Plc. paid $22m for an 8.56 per cent share of Asia Commercial Bank (ACB), and ANZ Banking Group Ltd paid $27m for a 10 per cent stake in Saigon Thuong Tin Commercial Bank (Sacombank), Vietnam’s largest semi-private bank in terms of capital.
Hong Kong and Shanghai Banking Corporation, Ltd also paid $17.3m for a 10 per cent stake in the Vietnam Technological and Commercial Joint Stock Bank.
The decree on foreign institutions buying shares in domestic joint stock banks is expected to be passed by the government this month.
The State Bank of Vietnam has opened up to allow a foreign strategic investor to acquire up to 20 per cent of the bank’s chartered capital, doubling the cap on stakes that could be acquired by foreign credit institutions excluding investment fund companies.




No. 778/September 11-17, 2006