Vietcombank bosses face worried shareholders

Monday, April 28, 2008
Vietcombank's shareholders voiced strong concerns about shrinking share prices in the bank's first general shareholders meeting on Saturday, putting management on the hot seat to explain the bank's shrinking assets during the first quarter of the year.

In last December's initial public offering, the average winning price per share for Vietcombank stock was VND107,860. Four months later, the shares are trading on the over-the-counter market at about VND50,000 each, a loss of 54%.

One shareholder said the winning price was too high because of the fixed initial offering price of VND100,000 per share.

Based on his calculations of capital, profit, P/E ratio and the real situation in the domestic stock market last December, he now figured a more realistic offer price should have been around VND20,000.

Vietcombank chairman Nguyen Hoa Binh, however, said the downtrend of the bank's shares was in keeping with the overall trend on the stock market.

Many investors asserted that Vietcombank was harming the interests of shareholders by failing to reach agreement on suitable share prices with foreign strategic investors.

Vietcombank general director Nguyen Phuoc Thanh pointed to the difficulty in meeting the legal requirement set out in Decision No 109 that shares be sold to foreign strategic investors at a price higher than the winning bid in last year's IPO.

However, he noted, if Vietcombank were unable to sell more shares to strategic foreign investors, it would be unable to finalise the equalisation process, putting the bank into a catch-22 situation.

As it stands, outside investors still only hold about 9% of equity in the bank, while the State continues to own over 90%.

Meanwhile, companies with less than 20% sold to investors, are not allowed to list on the stock market, leaving Vietcombank shares in a sort of trading limbo on the over-the-counter market.

"I haven't heard any specific plan to sell more shares or reduce losses to investors," complained one shareholder.

Bank leaders said they could ask the Government to allow them to list on the stock market, as a special case.

Some individual shareholders were calling on Vietcombank to start buying back shares from large institutional investors to keep the share price from plunging deeper.

Others were calling for issues of bonus shares to existing shareholders at prices of around VND50,000 to help them minimise their losses.

A few shareholders also voiced anger over the fact that, of the capital reaped by Vietcombank through its IPO, it was only allowed to retain 30%, with the remaining 70% going into the State.

They felt that this operated to the detriment of shareholders and wanted to know how even the 30% of capital gained from the IPO was being spent.

These and other questions were left unresolved at the conclusion of the meeting.

The meeting voted to elect a seven-member executive board and five-member supervisory board, which would be paid a total of 0.36% of the bank's net profits.

The shareholders also approved an annual dividend of 12.08% for existing shareholders. (Viet Nam News)