Recently, many foreign investors expressed their desire to participate in the restructuring of Vietnam’s banking system, especially “zero dong” banks.
In the system of credit institutions (CIs), there are 3 weak banks that have been bought at the price of zero dong, namely Ocean Commercial Bank (Oceanbank), Construction Commercial Bank (VNCB) and Global Petroleum Commercial Bank (GP Bank).
After the acquisition, the State Bank of Vietnam (SBV) has converted these banks into 100 percent state-owned limited banks, appointing people of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and Vietnam Joint Stock Commercial Bank of Industry and Trade (Vietinbank) to join the banks to support, and changed the name of VNCB to Construction Commercial One Member Limited Liability Bank (CBBank) and changed the brand identity of GP Bank.
The fact that foreign investors want to participate in the process of restructuring the Vietnamese banking system is no longer a new story, but recently the interest of foreign “giants” becomes clearer and more intense.
According to experts, the main factor for foreign investors to decide to “make money” to invest in Vietnamese banks is because of the improvement in asset quality (mainly due to the process of handling bad debts with positive progress), stable liquidity, profits of many banks increased sharply, etc.
Besides, the prospect of Vietnam banking system is improved from “stable” to “positive” and continues to be maintained in the coming years by international credit agencies.
SBV Governor Le Minh Hung shared that macroeconomic is stable, growth is sustainable, restructuring efforts have achieved positive results, which helped Vietnam continue to be a potential market for foreign investors, including investor in the banking sector.
In March, two large foreign corporations, Clermont (Singapore) and J Trust (Japan), expressed their desire to expand investment in the banking sector of Vietnam. Specifically, they want to participate in the process of restructuring credit institutions and weak banks in Vietnam.
J Trust expressed interest in participating in restructuring CBBank, not only in terms of capital but also in terms of technology support. This group wants the government and SBV to create favourable conditions in negotiating and successful transactions, thereby creating a premise for Vietnamese enterprises to cooperate and invest into Japanese enterprises.
Without specifying the desire to join any bank such as J Trust, Clermont Group expressed its desire to participate in the process of restructuring the Vietnamese banking system to contribute to the development of the banking system in particular and the economy in general.
Previously, in 2017 there was news that a foreign investors was in phase-2 of reviewing and re-evaluating Ocean Bank comprehensively. While with GPBank and CBBank, there are domestic and foreign investors initially approaching for the restructuring and acquisition. However, until now, no deal has been completed.
Regarding the proposal of foreign partners to join the restructuring of banks, according to experts, in the context of deep integration, although foreign banks have been able to penetrate into Vietnam market more easily, it is very difficult to have an extensive network like a domestic bank. Therefore, if a few thousand billion dong is required to buy back a domestic bank but there is a network and available staff and customers, foreign investors do not hesitate.
Meanwhile, for SBV, to deal with weak banks, selling to foreign investors has the potential to speed up the restructuring process. In fact, the banking system has improved significantly compared to the previous time, but domestic banks are still in the process of improving “health” and competitiveness when they are satisfying the regulations of SBV.
Therefore, supporting a weak bank will be a “burden” for domestic banks, and the ability to buy zero dong banks is extremely difficult.
At the recent meeting with J Trust, deputy prime minister Vuong Dinh Hue affirmed the desire of the Group is in accordance with the policy of the government of Vietnam to create opportunities for domestic and foreign investors, especially investors with financial resources and governance, acquire and develop weak banks in Vietnam, including CBBank.
The deputy prime minister said that the government of Vietnam wants to find a partner for transferring or reselling CBBank for restructuring. The deputy prime minister asked J Trust to study and discuss with the CBBank and SBV about the offer, on that basis, SBV will submit to the government and the prime minister for early consideration and solution.
In addition to CBBank, the deputy prime minister also welcomed J Trust to participate in the restructuring of other credit institutions in Vietnam.
In response to the proposals of Clermont and J Trust, Governor Le Minh Hung affirmed that SBV will continue to create favourable conditions, timely and appropriately support foreign investors wishing to explore opportunities for investing in the banking sector in Vietnam.
