Vietnam - ACB, Eximbank, Sacombank rumored to form new alliance: paper

The current alliance of Asia Commercial Joint Stock Bank (ACB )- the Vietnam Export-Import Commercial Joint Stock Bank (Eximbank) and other related individuals holds enough of a stake in Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) to call for an irregular shareholder meeting to form a new alliance.

A reliable source of Saigon Tiep Thi newspaper said that though Sacombank’s board of shareholders has chosen the board of directors and inspectors for the latest term, lasting until 2015, the ACB-Eximbank alliance could still have the legal power to do so.

Some insiders told Saigon Tiep Thi that ACB would transfer its current chief executive officer (CEO) Ly Xuan Hai to Sacombank to hold the same position.

But Nguyen Thanh Toai, ACB deputy general director cum spokesperson, told the newspaper that it is unlikely to happen.

The spokesperson for Eximbank, of which ACB is a strategic partner, said he has no information about it, but added that he would not be surprised if it happens.

A senior ACB officer told Saigon Tiep Thi the same thing, and added that ACB is in the process of choosing a new CEO to replace Ly Xuan Hai, who has held his post for 7 years.

Sacombank, which has a charter capital of about 10.74 trillion dong ($515.1 million), doubled the price of its shares when it started its initial public offering.

Dang Van Thanh, Sacombank chairman, his family members and related individuals, hold a 23.12 percent stake of Sacombank , while Huynh Que Ha and her husband hold a 5.22 percent stake.

So, the current share of Sacombank owned by its top leaders is 28.34 percent.

Thanh has told the press that as of August 2011, no one owned up to a 30 percent share of Sacombank.

Reportedly, there are unknown groups of investors spending some trillions of dong to buy Sacombank shares when they were recently traded at around 12,000-13,000 dong a share for the last 1.5 years.

But, Saigon Tiep Thi said it is possible for a new alliance between ACB-Eximbank-Sacombank.

Some insiders told the newspaper that the “unknown groups of investors” are all “acquaintances” of ACB and Eximbank officers.

The stakes ACB has in Sacombank are still unannounced, but late last year, Eximbank bought a 9.6 percent stake of the latter to increase its stakes in Sacombank to 10.81 percent.

Eximbank general director, Truong Van Phuoc, told Saigon Tiep Thi late last year that the bank is financially and manageably capable of making good use of the acquisition.

As a leading commercial bank, Eximbank knows very clearly the pros and cons of Sacombank and thus, will join the management board to build a long-term strategic development scheme for the bank, he said.

Eximbank’s pretax profit in 2011 was 3.9 trillion dong, up 11 percent over initially predicted. Sacombank’s total assets are equal to that of ACB, but in 2009, the return on equity of the former was 15.8 percent, while that of the latter was 21.78 percent. The equivalent rates in 2010 were 16.74 percent and 20.5 percent.

The pretax profits of Sacombank and Eximbank in 2009 were 2.175 trillion dong and 2.838 trillion dong, rising to 2.56 trillion dong and 3.1 trillion dong in 2010 respectively. The projected profits for 2011 are 2.73 trillion dong and 4.1 trillion dong.

M&A in banking industry expected to boom

Some five to eight Vietnamese banks will merge in the first quarter of 2012 as the State Bank of Vietnam pursues further restructuring of the banking sector, central bank Governor Nguyen Van Binh said on January 11.

"I think in the first quarter of 2012 there will be about five to eight banks that will be merged," Binh told an economic conference then.

Merger and acquisition (M&A) in Vietnam's banking industry is expected to boom between now until 2015, providing a golden opportunity for foreign banks to gain market shares in Vietnam, according to The ASEAN Banker Forum 2011 held in Hanoi in December 2011.

The State Bank of Vietnam (SBV) was developing detailed plans for reducing weak banks at the lowest cost, said SBV Governor Nguyen Van Binh at the Consultative Group of donors for Vietnam early December.

This showed that the SBV is very supportive of M&A, or consolidation of banks.

Many economists forecast that, after the first merger of three banks, Saigon Commercial Bank, TinNghia Bank, and Ficombank, into a new bank (still bearing the name Saigon Commercial Bank), M&A activities in the banking sector will be extremely exciting from now until 2015.

This is an opportunity not only for local banks, but also for other foreign banks.

Tuoi Tre

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