Source: www.asiaecon.org |
VIETNAMESE BANKS LOOK FOR STRATEGIC PARTNERS
Vietnamese commercial banks are discussing plans to look for foreign and domestic partners to serve their capital increase plan. The plans to increase chartered capital have been approved by the banks' shareholders. It is believed that more banks will sell their stakes to foreign partners by the end of the year, if the market shows favorable conditions.
Vietnamese commercial banks are discussing plans to look for foreign and domestic partners to serve their capital increase plan. The plans to increase chartered capital have been approved by the banks’ shareholders. It is believed that more banks will sell their stakes to foreign partners by the end of the year, if the market shows favorable conditions.
Vietnamese banks already had plans to increase their capital by finding foreign and domestic partners to buy stakes in their institutions starting last year. But the global financial crisis, that plundered the balance sheets of financial institutions around the world, forced the banks to shelve their plans.
The East Asia Bank (EAB) is an example of a bank forced to delay its capital increase plan. In March 2008, EAB planned to sell VND520 billion worth of stakes to foreign strategic partners, Braysam and JP Morgan, as part of their plan to raise capital from VND1,600 billion to VND3 trillion. But EAB decided to stop negotiations with the two financial institutions after the crisis broke out in the US.
In March 2009, EAB once again submitted the plan to raise capital from VND2,880 billion to VND4,500 billion this year by finding both domestic and foreign partners to provide capital. They submitted their plan despite their admittance that current economic conditions make it an unfavorable time for foreign cooperation.
Many other Vietnamese banks are currently reluctant to find and cooperate with foreign partners because of the current global economic downturn. They are instead opting to find domestic partners to provide capital for their capital increase plans.
Lien Viet Bank had plans on raising chartered capital this year from VND3,300 billion to VND3,650 billion. But the bank said they will only consider selling stakes to foreign firms at the end of 2009 or early 2010, when market conditions are more favorable.
OceanBank recently chose PetroVietnam as a strategic partner to provide more capital. Under their agreement, PetroVietnam will hold 20 percent of the chartered capital of the bank.
Many banking experts believe that Vietnam’s commercial banks are likely to more aggressively search for foreign partners, who typically have more funds to provide for capital raises than domestic partners, once the global economy starts to recover. This is particularly true now that foreign partners have the right to establish 100% foreign-owned banks in Vietnam.
But for now, as financial institutions around the world try to deal with their own problems, Vietnamese banks will have to either seek funds from domestic partners or delay their capital increase plans until the global economy recovers.
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Source: www.asiaecon.org |