On March 12th, Vietnam Technological and Commercial Joint Stock Bank (Techcombank) announced the investment worth over 370 million USD (equivalent to about 8.4 trillion dong) from two independent legal investors managed by Warburg Pincus. With over 370 million USD, the system of Vietnamese joint stock banks continues to receive a large investment from foreign investors, after the impressive return in 2017.
Prior to Techcombank, in 2017, the market continuously witnessed big and successful deals from this flow, such as Vietnam Prosperity Commercial Joint Stock Bank (VPBank) with 250 million USD, Hochiminh city Development Commercial Joint Stock Bank (HDBank) with 300 million USD, or Tien Phong Commercial Joint Stock Bank (TPBank) with 40 million USD.
Since foreign investors were willing to pay high price for most of the deals, creating a huge surplus which many Vietnamese banks have not generated for dozens of years. The common point is that the above investors all poured foreign capital for “reservation”, waiting for the plan to list shares in the context when the stock market is prosperous and exciting.
The above deals left behind a backward flow which occurred over a year ago, when a part of foreign capital was withdrawn from the market. With numerous foreign banks leaving the market, there were many comments and concerns about the market and the potential of investing in Vietnam’s banking system. However, an objective reason is that the capital withdrawers are also the institutions which have and have been establishing direct business in Vietnam. They wanted to limit conflicts in competition. In some cases, they withdrew capital due to the changes in the global business strategy.
In addition to the above reasons, a knowledgeable insider said that the foreign capital withdrawals at that time were very normal due to a less-mentioned main reason, in which the parent bank must have counterpart fund for the overseas investments in order to comply with Basel 3′s new standards. Considering this counterpart fund, some foreign investors decided to make divestment. However, following the 2017 developments and starting the year 2018, the large-scale investments and high bid prices show that a part of Vietnamese commercial banks are attractive to foreign investors.
The above deals could become a wave, as recently a bank has mentioned about a plan with a privatised state-owned bank, or the case of expanding foreign ownership limit which has been heated in recent information flows. It is easy to see that with large investments and surplus, the “reputation” about the quality of Vietnamese commercial banks in general has been continuously improved and upgraded in the recent time.
In 2017 and early 2018, the credit rating organisations such as S&P, Moody’s and Fitch (in early March) have continuously upgraded the ratings of some Vietnamese commercial banks. After the first phase of restructuring the system with numerous difficulties (2011-2015), the banking system of Vietnam is in the middle of the second phase of the restructuring (2016-2020), in which the new and brighter moves, and more deals with foreign investors can be considered a test result.
