Vietnam - Vietinbank refuses to sell stakes to Nova Scotia

The Vietnam Bank for Industry and Trade, better known as Vietinbank, will not sell its stake to The Canadian bank of Nova Scotia in the first quarter of this year, said a senior official of the bank.

The deal will not be carried out as the latter will pay about VND19,000 per share, VND3,000 per share lower than the initial plan, said Vietinbank chairman Pham Huy Hung.

The Canadian bank has asked for more benefits, including dividend payment for 2011 and some capital surplus for the acquisition, which will reduce the real value of Vietinbank share, coded CTG, from VND22,000 to VND19,000 per share, he said.

Vietinbank sold 10 per cent of its stakes to International Finance Corp (IFC), an investment arm of the World Bank Group, at VND21,000 per share early last year.

As a result, the bank cannot make such a deal for Nova Scotia at such a price right now, Hung added.

The commercial joint stock bank, in which the state owns over 80.3 per cent of its stakes, is considering selling 15 per cent of its stakes to other partners at a higher price, around VND28,000-30,000 per share, said Hung.

The offering price has been approved by the government and the State Bank of Vietnam, he said.

The bank in late June 2011 said it would complete the sale of 15 per cent stake to Canada’s Bank of Nova Scotia in the second half of this year.

Chairman Hung then said necessary procedures would be completed in the third quarter, and Bank of Nova Scotia will become VietinBank’s strategic shareholder by the end of this year.

VietinBank announced to have worked with its consultant JP Morgan on the stake transfer.

The stake transfer is part of a plan to raise the bank’s registered capital by 41 per cent, from VND16.86 trillion to VND23.8 trillion, via two share issues in 2011.

VietinBank in the first share issue will sell 337.2 million shares to existing shareholders at the face value, and in the second phase, it will issue 357 million shares to Bank of Nova Scotia, or a 15 per cent stake, at a negotiated price decided by the bank’s board of directors.

Raising capital is a must for VietinBank to improve its capital adequacy ratio (CAR) regulated at 9 per cent by the central bank.

The bank in December issued over 337 million shares to raise its chartered capital from VND16.85 trillion to VND20.23 trillion.

Among the newly raised capital worth VND3.37 trillion, the state contribution was VND2.7 trillion, making it the biggest shareholder withover 1.62 billion shares worth VND16.245 trillion, or over 80.3 per cent of Vietinbank’s shares.

Domestic and foreign shareholders hold 10 per cent, and the rest owned by IFC.

VietinBank is expecting to increase its charter capital this year from VND20.2 trillion ($963 million) to VND30.8 trillion ($1.4 billion), an increase of over VND10 trillion, said the chairman.

Currently, the State holds 80 per cent of shares in Vietinbank, while domestic and foreign shareholders hold 10 per cent and the International Finance Corporation (IFC) the remainder.

Vietinbank’s total assets at the end of 2011 were worth VND460 trillion ($21.9 billion), and the bank has planned to increase this figure to VND550 trillion ($27 billion) this year and $50 billion by 2015.

The bank has set a credit growth target in 2012 of only 17 per cent, down from 23 per cent in 2011, Hung said, and it has been in the process of restructuring its investment portfolios in key State projects, government bonds and construction bonds.

Vietinbank’s to issue $2 billion international bond

Vietinbank has been approved by the government to issue $2 billion international bonds this year.

The bank will organize a road show for its $500 million bond issue in 6 or 7 countries this month. It planned to issue $500 million international bonds with 5-year and 10-year terms in November last year.

It is working with foreign and local partners, including Barclays Capital, HSBC, Allen and Overy, YKVN, Milkbank, and Mayer Brown JSM Vietnam, to complete necessary procedures for the issue.

All the proceeds will be channeled for Nghi Son Oil Refinery project in northern central Thanh Hoa province.

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