VietNamNet Bridge - State-owned economic groups have three more months to withdraw capital from non-core business fields as requested by the government. But they have only gone halfway toward the goal.


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Part 3: SOEs told to focus on core business fields

Commercial banks could get lucrative credit contracts thanks to close relations with large state-owned conglomerates. Techcombank and Vietnam Airlines, the national flag air carrier, for example, in December 2014 signed two credit contracts worth nearly VND2 trillion, including VND1 trillion long-term loan to fund the aircraft purchase deal.

Meanwhile, state-owned enterprises (SOEs) can more easily seek funding from banks, considered as their ‘backdoor banks’.

However, SOEs not only have reaped ‘sweet fruits’ from their capital contribution to banks, but also ‘tasted bitterness’. A document from the Fulbright Economics Teaching Program (FETP) shows that six out of the first nine commercial banks the State Bank of Vietnam (SBV) forced to undergo compulsory restructuring because of bad performance were found having relations with SOEs.

Later, when more weak banks were named by SBV, OceanBank was on the list. SBV took over the bank for zero dong, while its president Ha Van Tham was arrested because of serious business wrongdoings. PetroVietnam, the national oil and gas group, was holding 20 percent of OceanBank’s stake.

Realizing the danger that SOEs were facing, the government told SOEs to withdraw capital from banks and finance institutions to focus on their core business fields. The capital withdrawal must be completed prior to the end of 2015.

However, it is not easy for SOEs to divest themselves of holdings. Only a few successful divestitures have been reported. These include the ones where Vinacomin (coal miner) withdrew capital from SHB, where it held 4.09 percent of stake, Vinatex withdrew from Navibank, the Vietnam Rubber Group withdrew VND335.78 billion from SHB, and Vietnam Airlines has quit Techcombank.

It is difficult for SOEs to find buyers of their stakes. The Electricity of Vietnam (EVN) failed to sell ABBank shares at a share auction in 2013. Later, it successfully reduced its ownership ratio in the bank from 21.27 percent to 16 percent after shares were sold to Geleximco, which accepted to buy the shares at face value. 

More recently, in mid-September, EVN announced the sale of 17 percent of ABBank, which includes the 16 percent of shares it is holding and the 1 percent being held by the Hanoi Electricity Corporation, at a price equal to face value.

In the case of GP Bank, according to SBV Governor Nguyen Van Binh, it had many chances to sell its stakes to new groups of investors. However, opportunities were missed because the buyers and sellers could not agree on prices. 

NCDT