Bank for Foreign Trade of Vietnam (Vietcombank) has divested capital in Shinhan Vina Bank and made a hefty profit from the deal, allowing the latter to be merged into Shinhan Vietnam Bank.

The board of directors of Vietcombank last week approved to transfer its 50% stake in Shinhan Vina Bank to Shinhan Bank as its South Korean partner in the joint venture bank. Vietcombank enjoyed a lofty profit of roughly VND1.3 trillion from the initial book-value contribution of VND589.39 billion.

Earlier on November 11, the central bank’s governor Nguyen Van Binh also signed a decision allowing Vietcombank to sell the 50% stake in Shinhan Vina Bank to Shinhan Bank. At the same time, the central bank permitted merging Shinhan Vina Bank into Shinhan Vietnam Bank.

All branches of Shinhan Vina Bank in Hanoi, Dong Nai and Binh Duong provinces will belong to Shinhan Vietnam Bank, which has raised its chartered capital to VND4.55 trillion thanks to the support from Shinhan Bank.

Shinhan Vina was established in 1993 with chartered capital of US$75 million, with paid-in capital contributed by Vietcombank and two other South Korean partners Korea First Bank and Daewoo Securities Co. Their respective stakes were 50%, 40% and 10%.

After that, Shinhan Financial Group acquired South Korean partners’ stakes and changed the bank into Shinhan Vina in 2001 with its total assets reaching some US$500 million.

A senior executive of Vietcombank confirmed to the Daily that his bank had received the payment from Shinhan Vietnam Bank.

The huge profit has been accounted into this year’s profit of Vietcombank, the second biggest bank in the country in terms of market capitalization on the local stock market. Meanwhile, the initial investment amount will be treated as part of the lender’s chartered capital.

This year saw Vietcombank undergoing two big divestment deals, the other one being the transfer of its 30% stake in Gia Dinh Commercial Bank. It has also sold a 15% stake to Japan’s Mizuho Bank as its strategic partner.

The banker commented that this is a win-win deal for both the seller and the buyer, especially when Vietcombank wants to withdraw money invested outside to mobilize all resources to cope with fast-changing financial landscape.

Similarly, Shinhan could concentrate all resources on a bank only instead of investing in both a 100% foreign-invested bank and a joint venture at the same time.

According to the central bank, Vietcombank’s two deals to transfer stakes to foreign partners have replenished a considerable resource of foreign currency, partly helping to ease the severe shortage of the U.S. dollars among lenders at home.

The Saigon Times Daily