Vietnam Prosperity Bank, or VPBank (HSX: VPB) has just announced setting its maximum foreign ownership limit at 15 per cent, with plans to make a private placement for a foreign strategic investor.
|VPBank's FOL ratio now sits at 15 per cent |
VPBank fixed its foreign ownership limit (FOL) at 15 per cent.
According to Decree No.01/2014/ND-CP on the purchase of shares in Vietnamese credit institutions by foreign investors, the shareholding ratio of any one foreign investor and its affiliates must not exceed 20 per cent of the charter capital of a Vietnamese credit institution while the total ownership of all foreign investors must not exceed 30 per cent of the charter capital of a Vietnamese commercial bank.
At the most recent annual shareholders' meeting, Ngo Chi Dung, chairman of VPBank's Board of Management, said that the bank is planning to offer a private placement to a strategic partner by the end of this year.
The bank can use its current treasury shares in combination with issuing new shares for the private placement to foreign partners. The move to reset the bank’s FOL came hot on the heels of VPBank announcing intentions to look for a strategic partner. VPBank is one of the few major domestic banks that have yet to pair with an international strategic investor.
In May 2020, VPBank’s board requested approval from shareholders to lower the FOL to 15 per cent from 22.77 per cent.
VinaCapital’s chief economist Michael Kokalari told VIR in a previous interview, “Banks want to put aside shares for potential strategic investors and/or for the issuance of convertible bonds that will be sold to foreign investors at some point in the future.”
Dragon Capital – Vietnam’s largest investment fund – has recently increased its ownership in VPBank to 5.12 per cent, thus becoming the bank’s largest foreign shareholder at the moment.
In particular, Dragon Capital's affiliated funds bought 3.15 million VPB shares. Of this, Vietnam Enterprise Investments Limited (VEIL) bought the most with 1.5 million shares, DC Developing Markets Strategies Pcl. bought 600,000 shares, CTBC Vietnam Equity Fund and Norges Bank bought 500,000 shares, and Samsung Vietnam Securities Master Investment Trust fund bought 50,000 shares.
A few weeks ago, Japanese financial giant Sumitomo Mitsui Financial Group (SMFG) acquired 49 per cent stake, equivalent to $1.4 billion, in FE Credit – VPBank’s consumer finance arm.
SMBC Consumer Finance Co., Ltd. (SMBCCF), a subsidiary wholly owned by SMFG, is the legal entity to purchase this stake.
In the banking and finance sector, Japan currently ranks third in terms of presence in Vietnam, with six branches, two wholly-owned financial services providers, and 10 representative offices.