Local banks queue up for bourse listing

The state has urged local banks to list on the stock exchanges in a bid to reform the banking sector Photo: Le Toan

At recent annual general meetings, various Vietnamese banks have announced plans to trade on the unlisted public company market (UPCoM). The long list includes VPBank, OCB, Maritime Bank, Kienlong Bank, VIB and Techcombank, all of which revealed that their listing plans have already been submitted to the State Securities Commission (SSC).

This is the result of constant reminders from the State Bank of Vietnam (SBV) and the SSC over the past two years. According to the regulators, listing will increase the liquidity of banks’ shares, improve transparency and reduce cross-holdings, which have long plagued the Vietnamese banking sector. When listed, banks will have their financial reports closely scrutinised by the public and stock exchanges’ owners, thus providing reliable information for investors.

“According to the SBV, all banks must list on the UPCoM or the other two stock boards by the end of 2016. To abide by the law, VPBank has submitted all necessary listing documents to the regulators and is awaiting more instructions. Moreover, since we’re seeking foreign partners to buy 30 per cent of our shares, we believe that getting listed will also increase our attractiveness to overseas investors,” said Ngo Chi Dung, chairman of VPBank.

However, not all banks have completed their listing plans for the deadline. As of May, there are eight publicly listed banks in Vietnam, only one-fourth of all domestic banks. A number of banks explained that significant problems along with the sluggish market environment have prevented them from getting listed.

“The current stock market conditions are not favourable for banks to list, and investors as a whole are still somewhat sceptical about banks. Thus, we’ve postponed listing to find a more suitable time and maximise our share price. This year, we’ll continue this strategy although we understand that getting listed is very important for our transparency,” said Phan Dinh Tan, chairman of Nam A Bank. The bank has delayed its listing since last year.

Meanwhile, some banks have been struggling with high amounts of non-performing loans. A notable example is Dong A Bank, whose listing plans were scrapped last year, the bank has received official warnings from the SBV about its lending operations. Dong A Bank has since focused on restructuring its credit quality, leaving listing plans aside.

According to banking expert Nguyen Tri Hieu, banks are still reluctant to get listed because of the high levels of transparency required on stock exchanges. After listing, banks must publicise crucial information about their operations such as market trading, the amount of bad debts, and their profitability. This is uncomfortable for many banks, which often keep operational details under wraps.

“I believe that the SBV and the SSC should be stern when instructing banks to get listed and have punishment options for banks that delay their listing plans. Only through this can we ensure that banks prepare their financial reports properly, bolstering their transparency and protecting the rights of investors,” said Hieu.