A bank can hold less than 5% of shares of another credit institution

After many delays, some commercial banks have withdrawn their contributed capital from other banks.

Vietcombank, for example, has divested 6.67 million shares, or 1.36 percent of the charter capital of Orient Bank (OCB), at VND13,000 per share.

The sale of all OCB shares brought profit of VND198 billion in the second quarter of the year. 

Prior to that, at the annual shareholders’ meeting held on April 27, Nghiem Xuan Thanh, chair of Vietcombank affirmed the bank will sell its stake in Eximbank and MB Bank will reduce the ownership ratio in the banks to 5 percent or below that level.

If implementing the plan, Vietcombank may make a profit of VND3.677 trillion as the cost price of Eximbank and MBBank shares were VND582 billion and VND1.243 trillion, respectively.

The other two state-owned banks, VietinBank and BIDV, are also making every effort to divest from other credit institutions. BIDV has signed an agreement on transferring its 50 percent ownership ratio in BIDV-Vietnam Partners to Xuan Cau Investment JSC.

Meanwhile, VietinBank has reduced its ownership ratio in Saigon Bank from 10.4 percent to 4.9 percent through open auctions.

Analysts noted that state-owned banks only have begun divesting recently, though they were urged to do this years ago. But the economic conditions were unfavorable. The stock market was not bustling, while many banks were under restructuring.

At that time, as the bank share prices were low, divestment brought losses. Meanwhile, state-owned banks were required to preserve the state’s capital

The stock market has recovered strongly in the last year, thus paving the way for banks to step up divestment. 

However, Tran Hai Yen from Bao Viet Securities commented that this has been done mostly by large banks. As for small banks with weak financial capability, it is not an easy task.

One of the solutions is seeking partners for M&A deals. This is the quickest and most reasonable way for banks to improve their capability and clear the cross-ownership status as well.

Maritime Bank has admitted both Mekong Development Bank (MD Bank) and Vinatex Finance JSC, where it held 10 percent and 11 percent of shares, respectively.

Prior to that, the market saw the merger of Southern Bank with Sacombank and MHB with BIDV.

In the latest news, the State Bank plans to amend Circular 06, extending the deadline for banks to reduce the ownership ratios to the permitted level to June 30, 2019. 

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Nam Mai