Top Vietnam bank weighs share issue to raise at least $600 mln-sources

VP Bank AG

01/06/2023 06:34

By Phuong Nguyen and Francesco Guarascio
       HANOI, June 1 (Reuters) - Vietnam's most valuable listed
lender, Vietcombank  VCB.HM , is tapping advisers for plans to
raise at least $600 million in fresh equity capital to build
firepower and better compete with its rivals, two sources
familiar with the matter said.
    The majority state-owned bank, with a market capitalisation
of nearly 450 trillion dong ($19 billion), has been trying for
years to raise its core capital, which is the lowest among
Vietnam's state lenders.
    Pressure on Vietcombank has increased in recent weeks after
private lender Vietnam Prosperity Joint Stock Commercial Bank
(VPBank)  VPB.HM  sold a $1.5 billion stake in March to Japan's
Sumitomo Mitsui Financial Group Inc  8316.T .
    Vietcombank is now doubling down its efforts for an equity
private placement, partly to meet the market challenge of its
local rivals including VPBank, said the two sources, who
declined to be named as the discussions were confidential.
    The move comes as Vietnam's banks face heat from a slowing
economy and protracted turmoil in the real estate sector,
stoking an uptick in bad loans and triggering broad rate cuts. 
    The sources said Vietcombank has contacted advisers,
including one international bank, to find potential buyers for a
private placement of its shares worth at least $600 million.
    One of the sources said that the bank could raise as much as
$1 billion.
    Vietcombank did not respond to a request for comment.
    Neither of the sources named any potential buyer.
    However, after Sumitomo Mitsui's acquisition of a 15% stake
in VPBank, Japanese rival banks were expected to increase their
interest in new deals with Vietnamese partners, Jon Bowden, M&A
partner at law firm White & Case, told Reuters. 
    Vietcombank's top private investor is Japanese lender Mizuho
 8411.T , which holds a 15% stake in the bank, according to its
website.
    When asked, Mizuho said it would not comment on individual
transactions. It also said Vietcombank is a strategically
important partner and Mizuho aims to deepen its partnership with
the bank to contribute to the Vietnamese and Japanese economies.
    
    M&A PARTICIPANT?
    In its push to boost its financial buffers, Vietcombank
approved in January a separate plan for a technical capital
raise using retained earnings.
    Vietnam's central bank (SBV) said last week it authorised
Vietcombank to increase its 'charter capital' by a maximum of
around $380 million by the middle of next year.
    However, that move may still not make Vietcombank the
leading bank by charter capital because its main state-owned
rivals, BIDV  BID.HM  and Vietinbank  CTG.HM , also have plans
to boost their buffers through similar technical capital raises,
and VPBank would remain bigger.
    Vietcombank has said it needs to boost its 'charter capital'
and become the No. 1 state-owned bank by that measure to
participate in the possible restructuring of weak banks.
    Vietnam's state news agency reported last month the central
bank wanted large banks, including Vietcombank, to take over at
least three smaller and weaker domestic lenders to strengthen
the country's banking system.

 (Reporting by Francesco Guarascio and Phuong Nguyen; Additional
reporting by Makiko Yamazaki in Tokyo; Editing by Muralikumar
Anantharaman)
 ((Francesco.Guarascio@thomsonreuters.com;))