Sacombank leads quest for capital

ACB hopes more capital will boost its overall market share

Saigon Thuong Tin Bank (Sacombank) last week announced it would increase its equity to VND1.25 trillion ($79.6 million) from its current level of VND740 billion ($47.1 million), solidifying its top position among Vietnam’s joint-stock banks.
The bank will raise the additional capital by selling new shares to its existing institutional investors, including the World Bank’s International Financial Corporation (IFC) and Britain’s Dragon Financial Holdings.
The two foreign investors hold a combined 20 per cent of the total 30 per cent stake that foreign entities are permitted to hold in Sacombank.
“We will seek 10 per cent of cash from foreign investors to raise foreign ownership in our bank to 30 per cent by this year,” Sacombank chairman Dang Van Thanh said.
“We want to see more foreign shareholders investing in the bank, not only to raise our chartered capital, but to strengthen the bank’s image and improve our business activities,” he said.
Vietnam Investment Review has learned that a number of foreign banks and financial institutions are seeking to buy into Sacombank, including Hong Kong and Shanghai Banking Corporation (HSBC), Australia’s ANZ Bank, and Singapore’s Temasek Holdings.
The bank has yet to decide on a buyer, a decision that is expected to be finalised by the end of this week, according to a source close to the bank, who asked not to be identified.
The move is part of Sacombank’s overall strategy to raise its chartered capital to $100 million by 2010.
Meanwhile, Asia Commercial Bank (ACB) said it would use shareholder profits to raise its chartered capital to VND880 billion ($56 million) this year, up from its current level of VND600 billion ($38.2 million).
“We plan to use shareholders’ non-dividend profits to increase our registered capital programme so that ACB can have at least VND880 billion by the end of this year,” said ACB general director Pham Van Thiet.
The bank also plans to float its shares on the local stock exchange to raise funds. “The stock market is the most appropriate channel for a healthy business to raise a large sum of money,” he said.
“When foreign rivals come to Vietnam, domestic banks will have to increase their capital or else see their market shares shrink,” he said.
The Eastern Asia Commercial Bank said it would augment its capital by VND150 billion ($9.5 million) this year to reach VND500 billion ($31.8 million), a move designed to enhance its competitive edge.
The bank also announced plans to set up five new branches, raising the number across the country to 47, and to double circulation of its ATM cards in a bid to increase its 13 per cent share in that market.
Other players like Eximbank, Military Bank, Techcombank, Vietnam International Bank (VIB), Phuong Nam Bank (PNB) and Ho Chi Minh City Housing Development Bank are also expected to increase their chartered capital amounts.
However, banking experts warned of the disadvantages of the move, citing increased dividend payments to shareholders as a significant drawback.
“Banks should consider increasing capital carefully, otherwise they will have to deal with the dividend burden,” said an expert, who asked to remain anonymous.