Vietcombank listing seems unlikely

Tuesday, April 15, 2008
Vietcombank, which made an initial public offering last year, is not likely to list in Ho Chi Minh as scheduled next June since its stock’s unofficial price is now at half the IPO price, according to local analysts.
“The bank’s IPO price is VND107,860 while its market price [on the informal over-the-counter market] is now VND55,000-58,000; so at what price will it trade on the exchange?” a financial expert in Ho Chi Minh City asked, adding, “Vietcombank surely won’t be able to list in June.”
The Hanoi-based bank raised around VND10.5 trillion (US$656 million) through the IPO which valued the bank at around $10 billion.
Vietcombank, known formally as the Bank for Foreign Trade of Vietnam, sold 97.5 million shares at an average price of VND107,860 against a starting price of VND100,000.
The move came as part of agovernment drive to open up the banking sector under which four more state-run banks are due to sell their shares list on the stock market this year.
Before the IPO, General Electric, Nomura and Goldman Sachs, which sought to become Vietcombank’s strategic partner, valued the lender’s share at VND42,000-65,000.
The bank said the price was too low and could cause a loss to the government, and delayed selling stakes to foreign strategic partners, instead going ahead with the share auction first.
“We will sell stakes to strategic partners at a price which won’t be lower than the IPO price,” an official from the state-owned bank told a press briefing after the auction.
A financial expert in Ho Chi Minh City said Vietcombank should have sold stakes to the strategic partners.
“Even the bank’s staff are suffering losses now since they paid more than VND60,000 for a share, higher than the current market price,” he said.
VIETCOMBANK FACTBOX
■ Vietcombank reported its assets rose 14 percent to VND196.12 trillion (US$12.2 billion) last year.
The Hanoi-based bank said loans surged 44 percent to VND95.58 trillion ($5.97 billion), less than 1.3 percent of which were bad.
■ It attracted deposits of VND143.64 trillion ($8.97 billion), up 20 percent from 2006.
The bank reported a gross profit of VND3.1 trillion ($193.65 million) but did not release the comparable figure or net profit for 2006.
■ The bank handled export and import payments worth $26 billion last year, a 14 percent rise and equivalent to 26.6 percent of the country’s external trade.
■ The bank admitted last month that profit would fall in 2007 due to mounting competition from more than 30 partly private and 28 foreign banks which hit revenues and increased costs.
■ It plans to list in Hong Kong or Singapore next year.