Vietcombank, the nation’s largest listed bank by market value, has completed its four-year search for a strategic foreign investor by clinching a deal to sell a 15% stake for US$567.3 million to Japan’s Mizuho Corporate Bank Ltd.
The contract with Mizuho Corporate Bank Ltd., a wholesale-banking unit of Mizuho Financial Group Inc., will further boost the financial position of the Joint Stock Commercial Bank for Foreign Trade of Vietnam, or Vietcombank.
Mizuho’s investment, which is equivalent to VND11.8 trillion, will help raise Vietcombank’s chartered capital to around VND23.2 trillion.
Mizuho will buy 347.6 million new shares in Vietcombank for VND34,000 (US$1.63) a share. Vietcombank said in a statement that Mizuho would be able to appoint one person to Vietcombank’s board of directors.
The signing of this agreement came last Friday after Vietnam’s central bank cleared Vietcombank to sell a 15% stake to Mizuho last Tuesday.
Mizuho is Vietcombank’s only strategic foreign partner and will provide the local institution with technical services to improve its business performance, including sending Japanese experts to Vietnam, training Vietcombank staff and offering business opportunities.
This transaction will need regulatory approval and the capital infusion will take place in the first quarter next year. This is Mizuho Financial Group Inc.’s first investment in Vietnam and its biggest one in Southeast Asia.
Yasuhiro Sato, chairman and chief executive officer of Mizuho Corporate Bank Ltd., said Vietcombank is Vietnam’s leading institution in terms of international-trade financing and foreign exchange trading services.
On the part of Mizuho, it will step up its relationship with Vietcombank to further improve services for customers.
Vietcombank hired Credit Suisse Group AG, Shearman & Sterling LLP and YKVN as consultants for this transaction.
Vietcombank was set up in 1962 and went public in 2009.
In a related development, Shinhan Financial Group, South Korea’s largest finance firm, which is a partner in the joint venture bank Shinhan Vina, has proposed buying Vietcombank’s stake in Shinhan Vina.
If the deal is successful, Shinhan Financial Group will merge Shinhan Vina into the wholly foreign owned Shinhan Vietnam Bank.
Market observers said there is a high possibility that Vietcombank will sell its stake in Shinhan Vina because of the central bank’s Circular 13.
The circular caps a bank’s investment in another banking institution at 11% of that institution’s chartered capital, and any excessive amount is not considered part of the bank’s equity and this can affect its Capital Adequacy Ratio (CAR).
Vietcombank’s total assets were put at VND344.2 trillion, or US$16.5 billion, on June 30, 2011 and its market capitalization at VND55 trillion, or US$2.6 billion on September 28, 2011.
Vietcombank is the country’s most profitable bank, with its pre-provision operating profit by the end of 2010 reported at VND7 trillion, or US$335 million, and its net profit at VND4.2 trillion, or US$203 million.
Other banks in Vietnam are also looking for strategic investors, including VietinBank and BIDV. VietinBank, the country’s second largest bank by assets, is in talks to sell shares to a second foreign investor after International Finance Corporation (IFC). BIDV is completing its equitization plan.
The Saigon Times Daily