VietNamNet Bridge – After the investment wave in 2008, the flow of foreign capital to vietnamese banks has decreased and nearly come to a deadlock due to the global financial crisis. however, analysts have said as the world’s economy is recovering a new flow of foreign capital is returning to vietnam.

More successful affairs

Representative from Mayer Brow law firm in Vietnam said that the firm is giving legal counsel on three or four commercial affairs in which foreign investors injected money in Vietnamese banks. The representative declined to reveal the names of the involved parties, but said the affairs are nearly wrapping up and everything will be made public in some days.

Among the new foreign investors are the world’s big bankers who want to become strategic partners of Vietnamese banks, investment funds as well as investment partners of entities that are not financial institutions.

Mekong Bank has recently announced that it has found a strategic partner to sell 20-30 percent of additional chartered capital in its plan to increase the chartered capital from one trillion dong to three trillion dong in 2010 to foreign shareholders. The negotiation is ending and Mekong Bank will announce its foreign partner by the end of 2010.

Meanwhile, TrustBank has also revealed it has found a suitable foreign partner.

In the plan to sell 110 million shares (which have the total value of 1.1 trillion dong in face value) in order to increase the chartered capital from two trillion dong to 3.1 trillion dong next month, OCB will sell 29 million stakes to the existing foreign partner, BNP Paribas. When the deal is completed, the foreign partner’s ownership ratio in the Vietnamese bank will increase from 15 percent to 20 percent.

This is also the way that many other banks, namely ABBank, Techcombank, VPBank, or SeABank will follow to increase capital.

Vietnam is an attractive investment address

Vietnam’s banking sector has always been considered an attractive investment field for foreign investors. The wave of investing in Vietnamese banks began in 2007 when a several big investors in the world came to Vietnam and agreed to buy stakes at very high prices, 3-5 times higher than the face values.

Everything has changed due to the global financial crisis. The foreign capital flow to Vietnamese banks decreased, while many foreign partners had to abandon their investment plans in Vietnam.

However, two years after the crisis, foreign investors have overcome difficulties and are trying to seek new investment opportunities, once again eyeing Vietnam’s banking sector. Luckily, now is also the time when Vietnamese banks need foreign partners. State-owned banks are seeking foreign partners, who can provide both capital and technology, to complete the equitization process. Meanwhile while joint stock banks are seeking foreign partners, who can provide capital to help them increase chartered capital to three trillion dong as required by law.

Analysts have pointed out that now is the right time for foreign investors to purchase stakes of Vietnamese banks because the shares are very cheap and the banking sector has always been prosperous.

In fact, successful deals could be seen even in the crisis period or the time, when the world’s economy had not yet fully recovered. In 2010, Vietinbank found two foreign strategic partners, the International Finance Corporation IFC and Canadian Nova Scotia Bank.

Meanwhile, VIB Bank sold 15 percent of its stakes to Commonwealth of Australia, the leading retail bank in Australia. The foreign ownership ratio is expected to increase to 20 percent by 2011.

Le Khac