SOEs struggle to divest

The divestment of capital from Vietnam’s banks remains a challenge for leading state-owned enterprises Photo: Le Toan

The government’s recently released May 2016 meeting resolution has continued to urge state-owned corporations, groups, and businesses to ramp up efforts for non-core capital divestment. To date, investment in the banking sectors of state-owned enterprises (SOEs) has amounted to about VND10 trillion ($456 million), with some major players being state-owned oil and gas group PetroVietnam, Vietnam’s second largest telecom operator MobiFone, and state power authority Electricity of Vietnam (EVN), to name but a few.

PVcomBank currently reported the largest state capital possession by an SOE. PetroVietnam retains a 52 per cent stake in the bank. In light of the Law on Credit Institutions, a corporate shareholder is not allowed to hold more than 15 per cent in a bank, whereas the cap for a shareholder group is 20 per cent. According to PetroVietnam leaders, they await government guidance in respect to their capital divestment plan from PVcomBank.

In 2015, PetroVietnam devised its plan on the shift in stake ownership in PVcomBank to the State Bank of Vietnam (SBV). A SBV representative has confirmed the information, adding that the group had submitted to the government the solution on capital divestment at PVcomBank. The final decision on PetroVietnam’s capital divestment from PVcomBank, however, remains to be seen.

MobiFone’s effort to divest from banks has also been fraught with difficulties. The telco recently offered to sell 14.3 million shares it held in TPBank, however, only 39 per cent of the stock found buyers. Earlier, MobiFone failed in its plan to divest 33.4 million shares in SeABank, only two million shares were sold.

Similarly, state leading telco Vietnam Posts and Telecommunications Group (VNPT) currently retains 6.09 per cent of the chartered capital in Maritime Bank, equal to 71.5 million shares, valued at around VND700 billion ($319 million), after repeated failed auctions.

Many other state groups contemplated capital exits from banks last year to meet the non-core divestment commitment of the government. For instance, last year EVN offered to sell 82 million shares the group kept in ABBank (equal 21.2 per cent of the bank’s chartered capital), but less than half of the stocks were sold.

Nguyen Dinh Cung, director of the Central Institute for Economic Management has attributed the failure of SOEs in non-core capital divestment plans to high stock prices. A proposal has been made permitting SOEs to directly sell stock to investors after successful negotiations instead of selling stocks through public auctions as is now the case.

In respect to this, Deputy Minister of Information and Communications Pham Hong Hai affirmed the government stance that “it is vital that we do not cause losses to the state coffer by selling state capital at low prices.”