State-owned banks hold upper hand over private banks

VietNamNet Bridge - State-owned banks, all with huge capital, continued to show their strength in 2018.


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While private banks such as VP Bank, Techcombank and HD Bank appeared in local newspapers in 2017 as parties in capital transfer deals, 2018 was the year of state- owned banks. 

BIDV caught the attention of the public with the issuing of 600 million shares to KEB Hana Bank, or 15 percent of charter capital.

The State Bank of Vietnam in September officially allowed Vietcombank to sell shares to foreign shareholders. Mizuho, the existing shareholder, also wants to inject more money to maintain its ownership ratio in Vietcombank.

The two sides in August 2017 had signed a preliminary agreement on the deal. Having a foreign strategic shareholder was the goal of BIDV, especially when compared with the other two big banks – Vietcombank and VietinBank.

BIDV remains the only state-owned bank which still has state ownership ratio of 95 percent. It is expected that the figure will fall to 81 percent after KEB Hana Bank pours money into BIDV.

Not only BIDV, but Vietcombank also wants to sell shares to raise charter capital. GIC, a Singaporean investment fund, once tried to negotiate with Vietcombank on share purchase, but the two sides failed to reach an agreement in prices.

Most recently, in September, the State Bank of Vietnam in September officially allowed Vietcombank to sell shares to foreign shareholders. Mizuho, the existing shareholder, also wants to inject more money to maintain its ownership ratio in Vietcombank.

The big changes with key staff of state-owned banks also stirred up the public. At BIDV, Phan Duc Tu, who joined BIDV in early 1990s, was officially appointed to the post of chair of the board of directors, which was vacant after the departure of Tran Bac Ha.

In the last two years, Tu has been acting as CEO and the legal representative of BIDV, and is a a member of the board of directors.

At VietinBank, Le Duc Tho, a member of the board of directors and CEO, is chair of the board of directors.

Any state-owned bank move will have significant impact on the financial market, especially interest rate policy, because of their large assets totalling over VND1,000 trillion.

The banks are eager for capital to improve their indexes, including the capital adequacy ratio, and medium- and long-term lending. Vietcombank, BIDV and VietinBank have been mobilizing tier-2 capital since the beginning of the year by buying government bonds.

State-owned banks still maintain a steady growth. Vietcombank continues to lead in terms of profits with total revenue of VND11.683 trillion in the first nine months of the year, an increase of 47.2 percent over the same period last year.


US$1=VND22,000


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Mai Chi

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