Singapore’s OCBC Bank to raise VPBank stake

Friday, May 16, 2008
VPBank is working to help Singapore-based OCBC complete procedures to raise OCBC's holdings in VPBank to 15%, the maximum stake allowed by law in a commercial bank by a single foreign strategic investor.

Any interest held by a single foreign investor requires State Bank of Viet Nam approval.

VPBank general director Nguyen Dac Son said on Wednesday that OCBC would pay 4-5 times more than the face value of VPBank's shares to obtain the additional interest.

"The price that OCBC will pay for an additional 5-per-cent stake in VPBank is likely similar to the amount the Singapore bank paid for the earlier 10-per-cent stake, even now during increased difficulties in the credit situation," commented a Kim Long Securities Co analyst who asked to remain anonymous.

OCBC bought a 10-per-cent stake in VPBank in April 2006 at a cost of VND250bil (US$15.6mil), becoming VPBank's sole strategic partner.

During negotiations to increase the stake to 15%, OCBC invested an additional $7mil for training courses for VPBank's staff, per its commitments as a strategic partner.

A larger OCBC stake, planned since last year, would help VPBank strengthen its relationship with OCBC and help promote VPBank's growth in such areas as risk management, governance and technology, Son said.

UK-based Standard Chartered Bank has also sought a 15-per-cent stake in Vietnam's Asia Commercial Bank, while Singapore-based United Overseas Banking Corporation has sought a 15-per-cent interest in Southern Bank.

"If domestic banks can make use of this foreign-investor interest, the banking sector will be stronger, and banking stocks will better perform their role on the stock exchange as a magnet for foreign capital," said the Kim Long Securities analyst. (VNS)