Vietnam bank aims to fetch USD700m selling major stake

People sit along a waterfront as residential and commercial buildings stand in the background in Ho Chi Minh City

The first Vietnamese bank granted government approval to sell a majority stake to a foreign investor could attract an investment of at least USD700 million.

Saigon Joint Stock Commercial Bank, the fifth-largest by assets, said it’s in talks to draw that investment by selling a controlling stake to a sole foreign investor. The funds will help strengthen its financial products and speed up the resolution of remaining bad debt.

Saigon Commercial Bank, or SCB, plans to sell more than half of the bank at par value through the issuance of new shares, Chief Executive Officer Vo Tan Hoang Van said.

“We’re really looking for a partner who would not only put money into the bank but also has the same vision about this market,” Van said in an interview at the bank’s Ho Chi Minh City headquarters, adding that he wants an investor to help grow the bank. “More importantly, they need to help our clients to complete their real estate projects so that we can solve the bad debt issue in a shorter time.”

Prime Minister Nguyen Xuan Phuc said in a Bloomberg Television interview in January he plans to increase the government’s 30 percent cap on total foreign ownership in banks to hasten the overhaul of Vietnam’s banking system. He singled out Ocean Bank, taken over by the State Bank of Vietnam in 2015, as a weak institution the government is willing to sell immediately to a foreign investor.

Saigon Commercial Bank has been in talks with six investors, including banks, equity funds and insurance companies from Norway, Indonesia, Taiwan and China, Van said. An unnamed foreign investment fund earlier this year offered to buy a 15 percent stake, according to Van. The bank also expects intensifying negotiations with two potential investors from China and Indonesia.

The lender aims to submit its stake sale plan to the central bank for approval early next year and expects to close the deal in mid-2018, Van said. The bank plans to hire an international bank as a consultant, he said, adding that the prime minister must ultimately sign off on the deal.

The sale of a majority stake may also affect plans for a listing after 2019 when its restructuring process, which began in 2012, is completed, Van said. Mai Ngoc Chau, Bloomberg