The Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) has just completed the last registration day (March 15th) to finalise the list of shareholders attending the 10th Annual general Meeting (AGM) in 2018.
The meeting is expected to be held on April 27th in Hanoi. At the meeting, plans, results and divestment plans at credit institutions (CIs) will be reported specifically to shareholders.
Previously, in late 2017, Vietcombank in turn made divestments in some CIs as well as expected to continue carrying out this activity in early 2018.
However, the first quarter of 2018 nearly ends but no specific information on the next steps have been released.
By the end of 2016, Vietcombank owned shares at five CIs, including Export Import Commercial Joint Stock Bank (Eximbank, 8.19 percent ownership), Saigon Commercial Joint Stock Bank for Industry and Trade (Saigonbank, 4.3 percent ownership), MB (7.04 percent ownership), Orient Commercial Joint Stock Bank (OCB, 4.72 percent ownership), and Cement Finance Joint Stock Company (CFC, 10.91 percent ownership).
In 2017, Vietcombank successfully divested capital in CFC and Saigonbank, partly divested capital in OCB, in which the ownership was reduced from 4.72 percent to 3.97 percent.
Accordingly, by the end of 2017 until now, Vietcombank is still holding stake at Eximbank, MB, and OCB.
Under the regulations as well as the plan launched by Vietcombank’s leaders in the end of 2017, the divestment at the above organisations will continue to be performed in 2018.
However, after successfully divesting capital in CFC and Saigonbank and planning to fully divest in OCB, the requirements to ensure the limits of investment at Vietcombank will change.
Specifically, under the provisions of Circular 36 of the State Bank of Vietnam on share ownership between CIs, Vietcombank is allowed to own not more than 5 percent of shares in two CIs. Accordingly, if the divestment in OCB is completed, Vietcombank does not need to fully withdraw capital in Eximbank and MB.
To meet this requirement, Vietcombank only needs to divest and lower the ownership at Eximbank from 8.19 percent to 5 percent, and similarly at MB from 6.97 percent (as of the end of 2017) to 5 percent. The market value of these two investments are several times higher than the initial investment of Vietcombank, especially MB with the uptrend of the stock price in recent time.
If considering these investments as potential which may increase along with market trends and the outlooks of MB and Eximbank, Vietcombank may consider just partially reduce the ownership rate to 5 percent. Thus, the above scenarios and options are expected to be set at Vietcombank’s upcoming AGM.
