Monday, January 8, 2007

Vietnam to sell stakes in 4 banks

Vietnam plans to sell stakes this year in four state-owned banks, including three of the four biggest lenders, according to a government statement.

The sale is to consist of shares of the Bank for Foreign Trade of Vietnam, the Bank for Investment and Development of Vietnam, the Industrial and Commercial Bank of Vietnam and the Housing Bank of the Mekong Delta, said the statement, posted on a government Web site Friday. The sale of shares in state- owned companies in Vietnam is referred to there as equitization.

Vietnamese state-owned banks account for about 70 percent of total credit in the country, the World Bank said last month.

The Vietnamese government is two decades into a shift to a market-based economy, a move likely to gain further momentum as the country joins the World Trade Organization on Thursday.

"The renovation process of the banking system is still slower than the general economic renovation process," the government statement said. The purpose of the share sales is "to meet the requirements of international integration, strengthening the ability of state- owned banks to compete."

The government will continue to hold a majority stake in all four banks, said a statement from the Vietnamese Government Office, which did not say what percentage of the banks would be sold or whether shares would be sold on a stock market.

"To place state-owned bank operations on a sound commercial basis, their managers would need to be given increased operational autonomy," the International Monetary Fund said in a report to a conference in Hanoi, posted last week on the IMF Web site. "We support the government's plans to accelerate the equitization of state-owned banks."

The Vietnamese central bank has been instructed to choose advisers for the Bank for Foreign Trade — known as Vietcombank — and Housing Bank stake sales next Monday, the statement said.

Vietcombank is the second-biggest bank in the country by assets, followed by the Bank for Investment and Development of Vietnam and the Industrial and Commercial Bank of Vietnam, Fitch Ratings said in a 2006 report. The biggest Vietnamese bank is the Bank for Agriculture and Rural Development.

Vietcombank said in July 2006 that a share sale might be held in the second quarter of 2007. As of the end of 2005, Vietcombank reported assets of 136.7 trillion dong, or $8.5 billion, and profit of 1.29 trillion dong. The bank may be worth more than $3 billion after equitization, according to an estimate last year by PXP Vietnam Asset Management.

The IMF statement also called for "adequate strategic foreign investor participation" in share sales. The government statement did not say whether foreign investors would be able to buy stakes in the four banks.

State-owned companies may account for as much as 38 percent of the Vietnamese gross domestic product, Standard & Poor's said in October.

Foreign investors are restricted to an overall 30 percent stake in Vietnamese banks, with no single foreign investor allowed to hold more than 10 percent.

The top two publicly traded Vietnamese banks by assets, Asia Commercial Bank and Saigon Thuong Tin Commercial Joint Stock Bank, are already at the 30 percent foreign investor limit.

Sourse: Bloomberg News


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