Raising its foreign-ownership limit (FOL) could mean that a private placement for potential foreign investors may be made, while at the same time, VPBank could offer more flexible conditions for present foreign owners, thanks to the new modification related to a larger FOL.
VPBank has just submitted a notice to garner shareholders' opinions on adjusting the maximum FOL ratio.
Specifically, the maximum FOL may be increased from 15 per to 17.55 per cent of the bank's authorised capital.
Currently, the Vietnamese legislation states that no foreign entity may possess more than 15 per cent of a bank's charter capital, and no foreign investor can control more than 30 per cent of the bank's charter capital.
In May, VPBank fixed its FOL at 15 per cent. Ngo Chi Dung, chairman of VPBank's board of management, previously said that the bank has plans to offer a private placement to a strategic partner.
VPBank is one of the few major domestic banks that have yet to pair with an international strategic investor.
Thus, the new adjustment is sufficient to allow the bank to make a private placement for prospective foreign investors, while at the same time, providing more flexible trading circumstances for current foreign shareholders.
VPBank executives predicted that this strategy would be completed in the first quarter of 2022 during a recent investors’ meeting. To put it another way, the bank's equity might hit a record high, above VND120 trillion ($ 5.22 billion) if successful.
In April 2021, SMBC Consumer Finance, a subsidiary wholly owned by Japanese megabank SMFG, acquired a 49-per-cent stake in FE Credit – VPBank’s consumer finance company. The Japanese bank has invested more than $1.4 billion in VPBank’s subsidiary, making it the largest finance-related M&A deal in Vietnam so far.
SMBC is also rumoured to be a potential foreign strategic shareholder of VPBank, particularly after the remarkable deal with FE Credit, among other foreign banks.
By Tri Lam