State ramps up bank equitisation process

MHB is due to join the ranks of state-owned firms being equitised this year

The state will retain a majority stake in the equitised banks, which together command a market share of 70 per cent.
“The State Bank of Vietnam must submit to the Prime Minister a final decision on international consultants for the Vietcombank and MHB equitisations before January 15,” said a government document released at last month’s cabinet meeting.
An official from the State Bank said a lack of experience in equitising state-owned commercial banks led to delays in equitising Vietcombank and MHB in 2004. The equitisation process was expected to proceed more quickly this time around.
BIDV and Incombank, meanwhile, must submit to the government its criteria and requirements for selecting an international consultant.
The selection of international consultants is conducted through a bid process. The consultant would have four major tasks in laying groundwork for the equitisation process, including appraising corporate value, drafting an equitisation plan, selecting strategic investment partners and conducting the initial public offeripng.
The government designates state agencies including the Steering Committee on State Enterprises Restructuring and Development, the Ministry of Finance, the State Bank of Vietnam and the Ministry of Planning and Investment to evaluate bids from international consultants and the equitisation plan of each bank.
BIDV has already fixed the schedule for its equitisation process. The bank will submit to the government its equitisation plan in May and an appraisal of the bank’s value in June. BIDV expects to select an international consultant in the first quarter of this year and then select and submit a list of strategic shareholders in the second quarter.
“We plan to list BIDV shares on the domestic bourse in 2008 and later on the Singapore stock market,” said BIDV general director Tran Bac Ha. All of the equitised state-owned banks expected to eventually list on foreign stock exchanges, according to the State Bank.
All five state-owned commercial banks, including Agribank, had total assets valued at VND719 trillion ($44.9 billion) as of September 2006, equal to 68.3 per cent of the nation’s total banking system, according to the State Bank.
They had equity of VND38.2 trillion ($2.3 billion) as of September 2006, equal to 55.9 per cent of market share in the country’s banking system. The five banks had earned VND9.6 trillion ($600 million) in pre-tax profits by the end of September, 68.6 per cent of the sector’s total profits.
BIDV, in particular, reported earning VND1.2 trillion ($75 million) in profits last year, a year-on-year increase of 62.4 per cent. Its had total assets of VND167.2 trillion and equity of VND10.5 trillion at the end of 2006.




No. 795/January 8-14, 2007