Vietcombank (VCB) shareholders approved the lender’s plan to issue an additional 360 million shares, equivalent to 10 per cent of its capital, to expand its charter capital to almost VND39.6 trillion (US$1.74 billion).

The shares will be sold either to the public or offered to no more than 10 investors (including existing shareholders) in a private placement in late 2017 or next year.

The selling price will not be lower than the price chosen by a valuation institution and its closing price on the HCM Stock Exchange on the trading day preceding the issuing date.

Vietcombank plans to use about VND3 trillion of the proceeds from the issuance to expand lending and other business activities, as well as fund possible mergers and acquisitions (M&As).

At the bank’s annual shareholders’ meeting on Friday, its chairman Nghiem Xuan Thanh said M&As would be a long-term strategy and should ensure that Vietcombank expands its network and accesses new markets.

Regarding this criteria, Thanh said Vietcombank has not yet found suitable partners.

Vietcombank has two major stakeholders, of which the State Bank of Vietnam owns 77.11 per cent and Mizuho Bank 15 per cent. Mizuho is the only foreign strategic investor of Vietcombank.

In August last year, Vietcombank and Singapore sovereign wealth fund GIC signed an agreement for GIC to acquire a 7.73 per cent stake, equivalent to 305.8 million new shares in the bank’s planned private placement of nearly 360 million new share issue.

The transaction, subject to approval by the Prime Minister and the State Bank of Viet Nam, has not taken place as by the end of last year GIC’s offer was considerably lower than market value. Thanh said Vietcombank would re-negotiate with GIC for a better price.

Vietcombank is the most expensive bank on the stock exchange with a share price ranging around VND35,000 ($1.54) a share. It is also the biggest listed lender with market capitalisation at VND126.3 trillion ($5.6 billion) on Friday.

Divestment from other banks

Vietcombank holds capital in five other credit institutions, three more than allowed by the State Bank of Viet Nam.

Chairman Nghiem Xuan Thanh said the bank would divest from the banks in which its stakes were not high, including Orient Commercial Joint Stock bank (5.07 per cent), SaigonBank (4.3 per cent) and Cement Finance Joint Stock Company (10.9 per cent) for a combined value of about VND300 billion.

Vietcombank sought to offload stakes in these institutions last year but failed due to low market liquidity.

The lender plans to retain its holding in Military Bank (7.16 per cent) given the bank’s positive performance and stable dividend payout. However, it will seek the central bank’s approval to divest 8.19 per cent of capital from Eximbank (EIB).

Vietcombank’s shareholders also approved the 2017 business targets, including growing pre-tax profit by 8 per cent year-on-year to VND9.2 trillion and increasing total assets 11 per cent to VND874.6 trillion.

The dividend rate will remain at 8 per cent this year.

The bank expects to expand its credit outstanding by 15 per cent to VND547.1 trillion, total capitalisation up 14 per cent to VND684.8 trillion and keep the bad debt ratio below 2 per cent.

In the first quarter of this year, the bank reported pre-tax profits of nearly VND2.65 trillion, up 15 per cent year-on-year. Last year, it earned pre-tax profits of over VND8.5 trillion, up 25 per cent year-on-year. 

VNS