Bankers to divest shares to clear cross-ownership status

A number of commercial banks are rushing to divest shares to withdraw capital they contributed to other banks many years ago.

Vietcombank has announced that it will put 45.6 million Eximbank shares (EIB) up for auction. With the starting price of VND14,497 per share, Vietcombank hopes the divestment would bring VND661 billion. 

The starting price set by Vietcombank is 5 percent higher than the EIB market price at VND13,800 per share.

In addition, Vietcombank has announced the auction of 53.4 million Military Bank shares (MBB) on October 15 with the starting price of VND19,641 per share.

Eximbank and Military Bank are the two last credit institutions where Vietcombank holds more than 5 percent of charter capital (8.19 percent in the former and 6.97 percent in the latter). 

If Vietcombank successfully implements its divestment plans, its ownership ratio in the two banks would decrease to below 5 percent and will no longer violate regulations on banks’ capital contributions to other credit institutions.

Prior to that, Vietcombank successfully sold 6.67 million shares, or 1.36 percent of charter capital of Orient Bank at VND13,000 per share. The divestment deal brought profit of VND198 billion to Vietcombank in the second quarter of 2018.

Currently, MBB is traded in the market at VND22,450 per share, so the amount of MBB being held by Vietcombank has the market value of VND3.38 trillion. Similarly, the amount of EIB Vietcombank has is worth VND1.46 trillion.

When Vietcombank completely divests from Eximbank and Military Bank, it may expect profit of over VND3 trillion, if noting that cost prices were VND582 billion and VND1.2 trillion, respectively.

Prior to that, it successfully divested from Saigon Bank and Cement Finance JSC.

VietinBank and BIDV, the other two large state-owned banks, have also been moving ahead with their divestment plans. BIDV has signed an agreement on transferring 50 percent of the joint venture’s capital, to Xuan Cau Investment JSC.

For VietinBank, it has reduced its ownership ratio in Saigon Bank from 10.39 percent to 4.91 percent through auctions.

Meanwhile, Eximbank has also withdrawn all of its shares in Sacombank, 8 percent of the bank’s charter capital. The income from divestment brought profit of VND648 billion.

A Vietcombank senior executive said that capital withdrawal is implemented following the State Bank’s request, which aims to clear the cross-ownership status. 

Under Circular 36, one bank must not hold more than 5 percent of shares in other credit institutions and must not contribute capital to more than two banks.

The divestment must be fulfilled by banks prior to February 2016, or one year after the circular took effect. However, the process has been going slowly.

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