Financial institutions begin public trading

UPCoM has hailed Viet Capital Bank and several others to publicly trade in 2020. Photo: Le Toan

MSB, formerly known as Vietnam Maritime Commercial Joint Stock Bank, officially joined a parade of financial institutions making their shares debut in Vietnam last week.

The bank held an impressive initial public offering (IPO) on the Ho Chi Minh Stock Exchange (HSX) amid a huge cash flow, stirring up the stock market.

Accordingly, MSB boasts an initial share price of VND15,000 apiece (65 US cents). Market watchdogs believe this is a relatively attractive valuation, with its price-to-earnings and price-to-book ratio lower than those of other peers.

Nguyen Hoang Linh, MSB’s general director, noted that the bank’s IPO on HSX will significantly enhance its position in the industry, as well as pave the way for MSB to tap into larger pool of public funds.

“Going public also helps MSB continue to improve financial capacity, corporate governance standards, transparency, and facilitate more favourable conditions to boost the bank’s stock value,” Linh added.

In May, MSB withdrew its IPO application as well as rescheduled the IPO until conditions became more satisfactory.

Market gyrations and indiscriminate selloff amid the peak of COVID-19 have been a brutal comeuppance for the global and local stock market, making many lenders hesitant to go public.

MSB is slated to divest its charter capital of consumer finance arm FCCPOM, and looking to shake hands with foreign and local investors alike to cash in on the consumer finance landscape.

An industry insider revealed to VIR that the bank also nearly reached its foreign ownership limit (FOL) even before the IPO, with 29.18 per cent of stakes already in the hands of foreign investors.

In the first quarter of 2021, MSB will ink an exclusive bancassurance agreement with one foreign-invested insurer, most likely Prudential or Manulife. Specifically, its profit before tax reached VND2.30 trillion ($100 million) after November, which completed 60 per cent of its whole year target, and up 116 per cent on-year. Furthermore, MSB expects to divest VND500 billion ($21.7 million) charter capital of FCCOM. Whether divesting 100 per cent or 50 per cent capital, MSB could rake in a profit of VND1.3 trillion ($56.52 million) or VND600 billion ($20.1 million) respectively, brokerage KIS reported.

On the same boat, 300 million of shares of Petrolimex Commercial Joint Stock Bank (PGBank) were publicly traded last week on the Unlisted Public Company Market (UPCoM). The bank’s foreign ratio is capped at 30 per cent in accordance to Vietnamese regulations.

Nguyen Quang Dinh, chairman of PGBank’s board, voiced his optimism. “This marks a significant milestone for our future development and is also a driving force for us to constantly enhance the bank’s commitment to customers and business efficiency,” Dinh said.

UPCoM has welcomed five lenders to publicly trade since the beginning of 2020, including Nam A Bank, Viet Capital Bank, Saigonbank, and ABBank. Ho Chi Minh City-based privately-held lender ABBank joined a rush of banks tapping public funds. The bank has shuffled its top management in the last two years, and has had five CEOs in just two years. Other lenders are placing their focus by switching exchanges to access a wider range of funds.

On December 16, BAC A BANK also submitted dossiers to list more than 700 million shares on the Hanoi Stock Exchange (HNX), from UPCoM.

Nam A Bank, after filing an IPO on UPCoM two months ago, has also now signalled its ambition to list on the HSX. “Listing on UPCoM before moving to the HSX will lay the essential foundation for us to prepare more thorough conditions in the longer scale. At the same time, the debut on UPCoM also helps Nam A Bank shares to improve liquidity, cement its position in the market, and bring maximum benefits to shareholders,” said Tran Ngoc Tam, general director of the bank.

Meanwhile, ACB, SHB, VIB, and LienVietPostBank have also reaped the fruits of listing on the major bourse in Ho Chi Minh City.

“After signing a 15-year exclusive bancassurance contract with Canada’s insurer Sun Life, ACB unfolds multiple opportunities, including being eligible for margin trading after six months re-listing on the HSX, feasible inclusion on the VN30 Index in August 2021, and VNDiamond and VNFIN Lead the following November,” explained Tran Dang Manh, analyst at Bao Viet Securities.

OCB chairman Trinh Van Tuan confirmed the bank’s commitment to “soon go public on the HSX”, saying that the IPO timing decision would be taken extra seriously to create more added value for its shareholders.

At the moment, Vietnam’s stock market is maintaining its impressive uptrend thanks to the rebound of banking stocks from large-cap lenders such as VietinBank, Vietcombank, BIDV, and Techcombank. However, there are still some lenders staying quiet in the IPO game, such as BaoViet Bank and VietA Bank.

Market watchdogs have expressed their caution over the amended Law on Securities taking effect from January 1, 2021, which requires public firms to trade on UPCoM for at least two years prior to listing on major stock exchanges – which could explain the rush of banks’ making debuts at this time.