VIB banks on enjoying common wealth

 VIB’s chairman Han Ngoc Vu tells VIR’s Nguyen Trang more about this arrangement.

Local commercial banks have encountered difficulties in seeking foreign strategic shareholders. How could you manage to successfully conclude the deal with CBA?

Mr Han Ngoc Vu

In fact, CBA and VIB have cooperated in the banking-finance sector for the past few years. It was a long process before the deal was closed. Successfully concluding such a deal is important, however, choosing a right strategic partner who has a common vision and long-term strategy with VIB is even more important. We consider the partnership with CBA as one of the favourable drivers for our continuous sustainable growth.

Local banks often find it difficult to close deals with suitable strategic partners due to pricing issues. Did VIB offer a price lower than other banks?

CBA is one of the world’s leading banks and of course, it must count on reliable valuation methods. In fact, prices in the over-the-counter (OTC) market have less impact on strategic shareholders’ decisions. CBA looked at our intrinsic value and prospects for sustainable growth rather than how VIB stocks were traded in the OTC market. I can affirm that CBA offered us a very reasonable price which reflects its high appreciation of VIB’s value.

One of the reasons local banks choose foreign strategic partners is to improve their competitiveness. How about VIB?

With a long-standing history of 100 years and total assets of $785 billion, CBA is currently the biggest bank in Australia as well as one of the top 20 banks in the world in terms of market capitalisation. In Asia, CBA has been successful in expanding into some dynamic economies such as China, India and Indonesia.

VIB is always striving for international standards. Therefore, we have been keen on the partnership with CBA, given its track record in technology transfer and technical assistance provided to its local partners for their improvement of competencies. Besides, retail and corporate customers will surely find VIB a financially stronger and safer bank with its strategic partnership with CBA.

What does VIB expect from this partnership?

We expect this cooperation will help VIB to perform better. Last year, CBA won important awards such as The Best Retail Bank in Australia and the Asia Pacific (Asian Banker Magazine), The Second Most Profitable Bank in the World (Boston Consulting Group, 2010) and One of the Top 20 Safest Banks in the World (Global Finance Magazine).

VIB will benefit from its expertise in customer service. In a broader extent, the partnership with a large and reliable financial institution like CBA will help VIB to enhance operational and commercial capabilities, risk management and competitiveness.

The $25 million worth of technical support for five years committed by CBA under a capability transfer agreement will help improve our service quality, corporate management and other expertise.

Some local banks have experienced insignificant technology transfer from their foreign strategic shareholders due to low ownership ratio. Do you think the 15 per cent stake is attractive enough to encourage CBA to transfer technology to VIB?

It is now too early to come up with any conclusion because CBA has just become VIB’s strategic shareholder. However, we are confident in the mutual benefit brought about by our partnership. Although having a 15 per cent stake, CBA has been offered corporate governance and management scope greater than what it should have been entitled to.

Moreover, CBA and VIB have agreed to increase CBA’s stake in VIB to 20 per cent, the maximum investment allowed by the State Bank, at the earliest opportunity. As such, I believe CBA has proper motivation for technology transfer.

If the world’s economic situation is not getting better soon, do you think it will adversely affect the support from CBA?

Even when the global economic crisis was at its worst some years ago, CBA remained one of the two most profitable banks in the world. Therefore, VIB believes CBA is certainly financially capable of providing continuous support to VIB for the sake of mutual benefit. The partnership has long been well prepared and CBA’s support for VIB has also been rolled out in an effective roadmap.