Japanese lender SMBC acquires 15 per cent stake in VPBank

October 23, 2023 | 17:02
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Sumitomo Mitsui Banking Corporation (SMBC), the second-largest bank in Japan, has successfully concluded the private placement, buying 15 per cent of VPBank's equity investment, becoming a strategic shareholder in VPBank's upcoming expansion phase.

The deal demonstrated the culmination of the banking sector alignment between Vietnam and Japan. This single transaction pushed up Vietnam’s position to top in terms of the value of merger and acquisition (M&A) transactions among Southeast Asian countries from Japan. This was also among the top 10 transactions which involved Japanese companies (both in Japan and overseas) this year.

SMBC and VPBank initially reached a private placement agreement at the end of March. Accordingly, VPBank agreed to offload more than 1.19 billion shares to SMBC, the subsidiary of Japan-backed Sumitomo Mitsui Financial Group, Inc. (SMFG). The total value of the issuance totalled nearly $1.5 billion. All shares issued through the private placement are subject to a lock-up period of five years.

VPBank has so far received a 10 per cent deposit from SMBC for the private placement prior to its AGM held in April. The remaining 90 per cent of the transaction value will be settled by SMBC following the conclusion of the deal.

Japanese lender SMBC acquires 15 per cent stake in VPBank
Leaders of the two banks exchanged documents for the completion of the private placement

The private placement came as part of the capital expansion plan that VPBank has been implemented since 2022, in a concerted effort to bolster its long-term financial strength and to support itself in its quest to achieve ambitious growth targets in the third five-year development strategy (2022-2026).

Thanks to the deal, VPBank’s owner equity will be boosted from $4.22 billion to approximately $5.7 billion. Its capital adequacy ratio, according to Moody’s Investors Service, will add up to almost 19 per cent - the highest among the credit institutions rated by the credit rating agency in Vietnam.

Given the strengthened capital base, VPBank will now be able to meet all customer needs in strategic segments, including individual and small- and medium-sized enterprises (SME). At the same time, VPBank will be geared up to serve large-scale corporate customers. In addition, SMBC is expected to directly contribute to VPBank’s growth by sharing its knowledge and experiences gained over the years in numerous Asian markets.

As for SMBC and SMFG as a whole, through a local tie with VPBank, the group collectively can increase its presence and unlock opportunities to fund large investment projects in Vietnam, particularly those in infrastructure construction, green growth, climate-related, and sustainable business projects.

VPBank announces SMBC as foreign strategic investor VPBank announces SMBC as foreign strategic investor

VPBank announced today that it has entered into an agreement with Japan’s Sumitomo Mitsui Banking Corporation (SMBC), a subsidiary of Sumitomo Mitsui Financial Group, Inc. (SMFG), to issue a 15 per cent equity stake through a private placement, officially welcoming SMBC as a foreign strategic investor of the bank.

Japanese financial behemoths extend SE Asia reach Japanese financial behemoths extend SE Asia reach

Three Japanese megabanks are doubling down on their emphasis on Vietnam’s finance and banking sector to experience rapid economic growth and leverage their investment portfolios across wider Southeast Asia.

VPBank has received a 10 per cent deposit from SMBC VPBank has received a 10 per cent deposit from SMBC

At an investor-update meeting on May 18, Luu Thi Thao, deputy general director of VPBank, revealed that the bank has received a 10 per cent deposit from Japanese partner SMBC, as part of the $1.5 billion private placement agreement signed between the two banks.

By Thanh Van

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