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Banks looking for strategic partners to serve capital increase plans   2009-03-19 - VietNamNet/DTCK

At shareholder meetings, a lot of commercial banks are discussing at their plans to look for foreign and domestic partners to serve their capital increase plan.


Last year, the global financial crisis had heavy impacts on the operation of the banking system, leading many big financial institutions in the world to bankruptcy. This has delayed the plan of Vietnamese banks to look for foreign partners in 2008.


However, the attempts to call for capital from foreign partners have been resumed in the 2009 shareholder meeting season. The plans by domestic banks to increase chartered capital have been approved by shareholder meetings, leading people to believe that more banks will sell stakes to foreign partners by the end of the year, if the market shows favorable conditions.


According to the capital increase plan submitted to the 16th shareholders’ meeting on March 8, 2008, East Asia Bank (EAB) planned to sell VND520 billion worth of stakes (in the plan on raising capital from VND1,600 billion to VND3 trillion in 2008) to foreign strategic partners, Braysam and JP Morgan.


However, the plan failed as the bank decided to stop negotiating with the two institutions after the financial crisis in the US broke out. As a result, the chartered capital of the bank increased to VND2,880 billion.


At the 17th annual shareholders’ meeting, EAB’s board of directors, once again, submitted the plan to raise capital from VND2,880 billion to VND4,500 billion this year by calling for capital from both domestic and foreign partners. The board of directors asked the shareholders to authorize them to negotiate with domestic and foreign partners on selling stakes to raise chartered capital.


Nevertheless, in current circumstances, EAB admitted that now is not a favorable time for foreign cooperation. The bank’s board of directors will, considering concrete conditions in 2009, conduct negotiations with partners and inform the negotiation results to shareholders.


Lien Viet Bank, which has been operating for nearly one year, also plans to raise chartered capital this year from VND3,300 billion to VND3,650 billion this year.  However, when asked about the plan on selling stakes to foreign partners, the bank said it will think of this at the end of this year or early 2010.


Other commercial banks in Vietnam also plan to sell stakes to domestic partners instead of foreign ones.


OceanBank has recently chosen PetroVietnam as a strategic partner. Under the agreement, PetroVietnam holds 20% of the chartered capital of the bank


In fact, commercial banks, which have foreign strategic partners, have not taken full advantage of the strength and support from the partners. Meanwhile, some foreign partners have withdrawn investments after a period of cooperation. IFC, for example, has withdrawn capital from Sacombank.


Banking experts said that in some cases, domestic banks will compete with foreign partners as foreign partners now have the right to establish 100% foreign-owned banks in Vietnam.

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