Vietcombank Shares: Which Scenario?

Saturday, May 17, 2008
On April 26, Vietcombank (VCB) organised its first general shareholder meeting. Attending shareholders showed their dissatisfaction, especially those bearing in mind that their trust was betrayed, as their rights and interests were not protected by any governing agency. So, what is the scenario for Vietcombank share price when it is listed on the stock market?
Undeniably, VCB shares will have a certain impact on the Vietnamese stock market. VCB shares are still the blue-chip on the market.
Investors were very keen on the initial public offering of Vietcombank although they seemed unsatisfied with the starting price of VND100,000 per share, the highest of starting IPO price of equitised state-owned enterprises. With strong trust on the long-standing VCB trademark, all offering volume was bought at the average winning price of VND107,572 per share. Following the IPO, VCB shares continually dropped. The price of VCB shares on the over-the-counter market was less than VND50,000 per share, which is the driver to pull down other financial equities.

Which price for strategic investors?

According to the privatization plan and business plans in 2008, VCB will pick up strategic partners and list its shares on the stock market. One of the biggest concerns now is the price VCB offers strategic investors. This move is considered to affect not only the VCB share price but also the whole Vietnamese stock market. So, which scenario is the best for VCB share price? Following are several proposals.

First scenario: Picking up strategic partners according to Decree 109

Under Government Decree 109/2007/ND/CP on transformation of wholly state-owned enterprises to a joint stock company dated June 26, 2007, VCB will sell its stake to strategic investors at a price not lower than the average winning price of VND107,572 per share. This price is fair for all investors but strategic investors will not accept this. Simply, strategic investors are institutions and they only operate on the primary market; thus, they will not accept a price applied to small investors on the secondary market. Before the IPO, strategic partners suggested to buy shares at VND40,000-60,000 per share. The price rate was put up when the VN-Index was above 900 points. Thus, they may lower the recommended buying price because the VN-Index has dropped to around 500 points. The selection of new strategic partners will take a long time and the negotiation process will have to start again. Moreover, at present, bank and financial shares are devaluating. Hardly anyone accepts to buy VCB shares at the average winning price plus.

Second scenario: if selling price is lower than IPO average winning price

In case, VCB cannot select strategic foreign partners, it will have to consider lowering selling price.

However, in addition to the violation of Decree 109, this will hurt investors joining the IPO. Investors will lose trust on the privatization process of the government. Thus, the consequences are immeasurable.

Starting price: which rate?

Not only encountering difficulty in selecting offering price for strategic investors, VCB also faces difficulty in determining the starting listing price.

After closing at VND107,572 per share at the IPO, VCB share price nosedived to around VND50,000 on the over-the-counter market. The price of VCB shares dropped by half. So, which rate is suitable for the starting listing price of VCB shares?

First scenario: Equal to average winning price

VCB shares will be listed on the Ho Chi Minh City Stock Exchange (HOSE) at the starting price equal to the average winning price of VND107,000. Certainly, it is forecast to be quickly return to VND50,000-60,000 per share, even lower.

If the VCB shares are listed at the first price of VND107,000 per share, with a chartered capital of VND15,000, the market capitalisation of VCB is VND160,500 billion (US$10 billion). At present, the total market capitalisation on HOSE is around VND230,000 billion. Then, the market cap of VCB will equal to 69.78 per cent of the total market cap on HOSE. What will happen to the Vietnamese stock market if VCB shares continuously drop? VN-Index will fall and investors’ sentiment will be affected.

Second scenario: Around OTC price

If VCB lists shares with the starting price around the OTC price, it will indirectly admit its wrongness in corporate valuation and setting bidding price. This will have negative impacts on upcoming IPOs of other state-owned enterprises.

Clearly, VCB is encountering a big challenge. The lender’s move will certainly impact the stock market in general and VCB in particular. (Viet Nam Business Forum)

Vietcombank finance leasing arm to raise chartered capital

Friday, May 9, 2008
Vietcombank Finance Leasing Co has been approved to raise the chartered capital from 100 billion dong to 200 billion dong, according to SBV's Decision No 1016/QD-NHNN dated May 6, 2008.
In addition, the company also was licensed to amend regulations after completing necessary procedures to register the new-chartered capital under current laws.

Vietcombank issues C/Ds in both US dollar and euro

Thursday, May 8, 2008
The Bank of Foreign Trade of Viet Nam, or Vietcombank recently issued Certificate of Deposits (C/Ds) in US dollar and euro to institutions and individuals with progressive interest rates.

Vietcombank's C/Ds have the highest interest rate of 6% per annum in US dollar and 2.7% per annum in euro.

At the same time, Vietcombank also increased dong deposit rates in some its branches to 12% per year, the highest level in the market at the moment.

The bank's these moves aim to increase its capital and limit capital rotation amongst banks due to the difference in interest rates.

Vietcombank fund management arm releases 2007 fiscal report

Wednesday, May 7, 2008
The Vietcombank Fund Management Co (VCBF) recently released its 2007 brief fiscal report with nearly 133.348 billion dong in total assets including 3.56 billion dong in fixed assets and 93.64 billion dong in ownership capital.
Last year, the company posted nearly 68.237 billion dong in revenue from business activities, 3.48 billion dong in revenue from finance activities and nearly 54.529 billion dong from after tajavascript:void(0)
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Vietcombank's counterparty credit rating outlook cut to negative - S&P

Saturday, May 3, 2008
Standard & Poor's Ratings Services said it cut the outlook on its counterparty credit rating on Bank for Foreign Trade of Viet Nam (Vietcombank) to negative from stable and affirmed the counterparty credit rating at 'BB/B' following the revision on the outlook for the sovereign credit rating on Viet Nam.
The ratings agency said the action reflects the bank's systemic importance in the Viet Nam banking system such that its ratings would qualify for a two-notch uplift from its standalone rating of 'B+'.
However, the counterparty credit rating on Vietcombank would move downward with the sovereign credit rating as implicit government support cannot raise the rating on the bank above the foreign currency sovereign rating, the ratings agency said. (Thomson Financial)

Vietcombank to increase dividend to shareholders

Tuesday, April 29, 2008
Vietcombank's first shareholders' meeting was held in Hanoi on April 26 with the nomination of director board, supervision board for the term of 2008-2013, the approval on operation regulations, business orientation and plans in 2008.

Accordingly, the bank's director board includes seven members and the supervision board has five members with the wage equalling to 0.36% of its after-tax profit.

Speaking at the meeting, the bank's general director and chair Nguyen Phuoc Thanh pointed out changes and high risks of the domestic banking and stock market. This year the business safety will be given high priorities with targets of maintaining the bad debt ratio of 2.6% and the growth rate of below 30%. In addition, the bank plans to add 905 billion dong to the risk prevention fund, bringing the total figure to 2.321 trillion dong for particular risk prevention fund and 810 billion dong for general risk prevention fund.

By December 31, 2008, Vietcombank's total asset could be 211.084 trillion dong, rising 7.72% year-on-year while the revenue is targeted at 4.537 trillion dong, up 13.94% yoy, revenue from service and other activities estimated at 2.339 trillion dong, up 6.97% and a dividend of 12.08%.

Vietcombank expects to become a financial holdings group ranking among Asia's top 50-70 largest ones in the period of 2015-2020 with the capital scope of over US$30 billion and total ownership capital of about US$2 billion by 2015.

The meeting also passed the plan to select foreign strategic partners and the roadmap of domestic and overseas listings. (VNA)

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)

Vietcombank General Shareholders' Meeting 2008: Puzzle Pieces

Monday, April 28, 2008
Vietcombank, one the largest commercial bank in Viet Nam held its first General Shareholders' Meeting on April 26, 2008. For the first time the name Viet Nam Joint-stock Bank for Foreign Trade has ever appeared. The meeting marked a new stage of development for Vietnam's most hitorically rich commercial bank.
However, much of its headache will still be ahead. The SGM was organized amid the stock market chaos, with Vietcombank's stock price plunged by about 50% compared to its IPO price in late 2007 (at the time VND 107,000/share). The majority of its shareholders attended the meeting appeared to be puzzled and concerned, given the current stock price on the free market priced in between VND 50,000-60,000/share. A disgruntled shareholder also tried to explain his computation that Vietcombank's stock price should have been around VND 14,000-22,000/share, a number that shocks everyone that is familiar with the evolution of Vietcombank's IPO since its issue of convertible bonds in 2006.
Domestic shareholders shared the view that the Vietcombank's stock might have been mistakenly priced during the IPO process. They complained there should have been ways to alleviate the current difficult situation. Alternatives should be taken taking into account its next steps of selecting a "strategic partner" and listing its stocks. Some suggested the bank purchase stocks to enrich treasury stock, creating liquidity and stopping the price from further drop.
CEO of Vietcombank, Nguyen Phuoc Thanh, unveiled the fact that the bank now faces a dilemma. The current market price of 50-60,000 would damage the trust of existing shareholders who bought Vietcombank stock at over 100,000. But if the bank thinks about any higher price than the market level, it could hardly identify a business partner, a critically important assignment of the BOD predefined at the outset of the IPO.
Vietcombank has now 15,500 shareholders, but they collectively hold only 9% of its equity. 91% remains with the State. All major decisions regarding the future of the bank will still be made by the government. Given its 15,500 shareholders, only 2,000 registered to attend the GSM, but only 700 showed up. The many shareholder left the GSM before the discussion session on the bank's business plan and the voting for this year's BOD. (Saga Viet Nam)

Vietcombank reports performance in Q1

Friday, April 25, 2008
Bank for Foreign Trade of Viet Nam (Vietcombank) recently announced that up to March 31, its total capital reached 195.587 trillion dong, 105.562 trillion dong in outstanding debts, up 10.1% against last year and the overdue debt rate was 1.4%.
In particular, the bank’s turnover from export and import payment sector gained US$8.428 billion in the first quarter of 2008, up 32.3% against the same period of last year or 24.9% of this year’s plan and accounting for 25.2% of the country’s export and import market share. In January-March, Vietcombank’s export turnover obtained US$4.799 billion and import spending was US$3.628 billion.

As for card sector, the bank launched 5,365 more international credit cards in the first quarter of the year, bringing the total figure to 26,207 international credit cards issued by Vietcombank. The lender also issued 242,687 cards of connect 24 and 12,197 MTV cards and Visa debit cards. Turnover from international card payments gained US$174 million or 32.5% of the year’s plan, and the turnover from using credit cards issued by Vietcombank was 484 billion dong, equalling to 12.7% of the year’s target.

As for field of trading foreign currency, the bank reached over US$7 billion, a year-on-year increase of 36%, of which, Vietcombank bought in US$3.481 billion, up 34% yoy and sold out US$3.551 billion, increasing 38% yoy. Foreign currency being sold out for importing petrol reached US$504 million, a higher level than US$399 million of the same period of previous year.

In the first quarter of 2008, Vietcombank’s after tax profit attained over 900 billion dong.

This year, the bank targets to keep outstanding debt below 30% and the bad debt at maximum of 2.6% and reach 158.861 trillion dong in total deposits from the economy and a chartered capital of 15 trillion dong.

The bank also plans to expand its network with branches in Hanoi, Thanh Hoa, Ha Tay, Tien Giang and Tay Ninh and 60 transaction offices nationwide.

With this target, Vietcombank expects to earn 4.537 trillion dong in revenue, up 13.94% on 2007, 2.339 trillion dong in revenue from other services and business activities, a year-on-year increase of 6.97% and 3.383 trillion dong in profit. (SBV)

Vietcombank says bad debt edges up to 1.4 percent in Q1

Friday, April 25, 2008
Vietcombank, Viet Nam’s third-largest lender, said Wednesday its overdue debt edged up to 1.4% of outstanding loans in the first quarter of this year, from less than 1.3% in the year-ago period.

The Hanoi-based bank, Viet Nam’s first state-run bank to float last December, said loans on March 31 rose 10% from the end of last year to VND105.56 trillion (US$6.6 billion).

The government has said it would reduce ownership gradually to 51% of stake in Vietcombank, which handles a quarter of Viet Nam’s total export and import payments.

Vietcombank did not give a reason for the higher overdue debt or provide its bad debt rate in the first quarter but said it made a net profit of 900 billion dong ($55.59 million), a statement on the central bank’s website (www.sbv.gov.vn) said.

Its total assets eased 0.3% from the end of 2007 to VND195.59 trillion ($12.13 billion) in March, the statement said without giving a comparative figure for profit in the first quarter of 2007.

Vietcombank Chairman Nguyen Hoa Binh said it was the first time in the bank’s 45 years of operation that the total assets declined.

The lender is set to list overseas in 2009

Global economic slowdown and rapid changes on domestic monetary markets has affected Vietcombank’s performance, Binh said at a news briefing Tuesday.

Vietcombank is due to hold its first shareholder meeting on Saturday in Hanoi.

The bank has said the meeting would discuss business targets for 2008, selection of a foreign strategic investor and also its domestic share listing.

Chairman Binh said Vietcombank would list shares on the country’s main exchange in Ho Chi Minh City in June while the actual debut date would depend on shareholders’ approval as well as approval from market regulators.

Vietcombank also planned to list overseas next year, Binh said without naming a specific market but Vietcombank officials have said the bank could list in Hong Kong or Singapore.

The lender has projected a credit growth of 30% this year, in line with a central bank’s 30% growth target for the entire banking industry as it moved to tighten money supply to control double-digit inflation.

Last year Viet Nam’s lending surged 54%.

Vietcombank expected its gross profit to rise 11.68% to VND3.38 trillion ($209 million) in 2008, it said in a report issued to shareholders ahead of the Saturday meeting.

The bank aims to cut bad debt to 2.6% of loans this year from 3.4% last year while its projected return-on-equity would ease to 15.71% from 16.95% in 2007, the report said.

Credit growth at banks and financial institutions in the Southeast Asian nation reached about 50 percent last year, according to the International Monetary Fund.

The government is prioritizing controlling inflation over economic growth.

Viet Nam may reduce this year’s target growth rate to around 7% instead of the 8.5-9% band set last year. (Reuters)

Choosing strategic partners: Vietcombank at disadvantage

Wednesday, April 23, 2008
Vietcombank is thought to be at a disadvantage in negotiating with foreign investors to choose strategic partners, especially in relation to share prices.

One of the most important topics to be raised at the shareholders’ meeting of Vietcombank, slated for April 26, will be the selection of foreign partners.

In fact, there is one special thing in Vietcombank’s equitisation process: the government decided to make IPO first and then look for strategic partners. The change ‘at the last minute’ originated from difficulties in negotiating about stake sale prices with candidates.

As Deputy Prime Minister Nguyen Sinh Hung instructed, the stake prices for strategic partners must not be lower than the average IPO price. And the instruction has been putting big difficulties on Vietcombank.

Vietcombank’s shares are selling at VND53-55,000/share only on the OTC market, much lower than the average IPO price at VND107,572/share, and even lower than the preferential price level at which stakes were sold to Vietcombank’s staffs.

A question has been raised for Nguyen Hoa Binh, Chairman of Vietcombank: if the low price of Vietcombank’s shares on the market puts Vietcombank at a disadvantage when negotiating with candidates, could candidates take advantage of this to force the price down?

Binh said that Vietcombank has anticipated this, but declined to give an answer, reasoning that the issue was not listed among the issues he was authorised to provide information about.

However, Binh said that the low price of Vietcombank’s shares on the OTC market would be an advantage to the sellers. He said that share price decreases are undeniable, and that the price is decided by the market’s supply and demand.

Binh declined to give information about the prices candidates offered.

Besides sale prices, the time to sell stakes is also a problem for Vietcombank, indirectly creating advantages for candidates. It is clear that in the first shareholders’ meeting, Vietcombank will still not have foreign strategic partners, and it is highly possible that it will not have them when it lists on the bourse.

The prolonged process of selecting foreign strategic partners will affect shareholders’ thoughts, as shareholders want to inject money in a company where everything is ready. Therefore, the presence of strategic partners at the listing moment has significance.

However, Binh said that Vietcombank will settle the problems step by step, with the priority to be given to urgent matters.

Binh said that Vietcombank will not get strategic partners at any cost. He said that the selection of strategic partners must serve the benefit of Vietcombank’s shareholders and the country, while the bank will not aim to seek short-term financial sources.

No exact date has been set about when Vietcombank must finish selecting strategic partners; therefore, the time to sell stakes is not an issue at the negotiating table. However, Binh has revealed that the bank wants to complete the work in 2008.

In fact, many foreign investors have expressed interest in buying Vietcombank stakes. Besides the negotiations with existing candidates, Vietcombank is also working with new names.

Binh has confirmed that despite the difficulties, Vietcombank will not ease the requirements on strategic partners. (TBKTVN)

Vietcombank assets shrivel during first quarter

Wednesday, April 23, 2008
Vietcombank’s assets shrank slightly during the first quarter of the year, according to business reports issued on April 22 in advance of Saturday’s general shareholders meeting.
As of March 31, total assets of the Hanoi-based bank had fallen to 195.58 trillion VND (12.22 billion USD), down 0.3% from the same day last year.
This was the first time Vietcombank has witnessed a decline in total assets in the past 45 years, said bank chairman Nguyen Hoa Binh in a press conference on April 22 announcing the results.
”The situation has been affected by slower growth in global economies and rapid changes in the nation’s monetary market,” Binh said.
Vietcombank has targeted total assets of 211.08 trillion VND ( 13.19 billion USD) by the end of this year, up 7.7% from last year’s total. The bank projects total assets of 30 billion USD by 2015.
The bank’s outstanding loans by the end of March were up 10.1 percent to 105.6 trillion VND (6.6 billion USD), of which non-performing loans accounted for 1.4%. The bank targets this figure to gain 29.2% through the end of the year, to reach 123.91 trillion VND (7.74 billion USD) by December 31.
Profits in 2008 are projected to increase 11.68 over 2007, to 3.38 trillion VND (211.43 million USD).
Vietcombank currently has 12 trillion VND (750 million USD) in charter capital. Based on its approved equitisation plan, that figure will be increased to 15 trillion VND (937.5 million USD).
The bank has plans to issue 3 trillion VND (187 million USD) in shares to strategic investors this year, but is still in the process of negotiating with potential partners. None of these possible strategic partners has yet been named.
Binh on April 22 re-affirmed that Vietcombank shares would be listed on the HCM City Stock Exchange sometime this year but declined to release further details.
Vietcombank, newly equitised in 2007, will hold its first-ever general shareholders meeting on Saturday at the National Convention Centre in Hanoi .
The bank has over 15,000 shareholders eligible to attend.
The meeting will discuss personnel issues regarding the seven-member executive board and five-member supervisory board and the bank’s 2008 business plan.
Individuals or institutional shareholders representing ownership of at least 5% of equity in the bank are eligible to propose issues for discussion in the shareholders meeting. (VNA)

Vietcombank to hold first shareholders' meeting in 2008

Tuesday, April 22, 2008
The Bank for Foreign Trade of Viet Nam (Vietcombank) recently announced that it plans to hold first shareholders' meeting this year on April 26 at the National Conference Centre in Hanoi.
The shareholders' meeting will discus on brief report on Vietcombank's equitisation process and pass the operation regulations, development orientation from 2008 to 2013, this year's business plan and the plan to list shares on the stock market this year.
This year, Vietcombank's total ownership capital could be over 20.331 trillion dong, up 53.62% against 2007 and nearly 211.084 trillion dong in total capital, rising 7.72% from 2007. The bank also targets to reach after tax profit growth of 11.68% against the previous year, pay a 12.08% dividend this year and reach a credit growth rate of 29.2% against 2007.
Vietcombank plans to continue selecting strategic investor within this year and offer more shares to hike chartered capital to 15 trillion dong in the third quarter of 2008. (DTCK)

Vietcombank going ahead with listing

Friday, April 18, 2008
Finally, Vietcombank has announced it will hold its first shareholders’ meeting on April 26, the first move in its plan to list on the bourse. The long silence of the bank since its IPO in December 2007 has made people think it forgot its promise to list.
The new stage in Vietcombank’s 45-year operation period will be marked on April 26, when Vietcombank holds its first shareholders’ meeting.
At the meeting, Viecombank’s shareholders will vote on the bank’s operation regulations, the number of management board and supervision board members. They will also approve the business plan for 2008-2013 and the business plan for 2008.
The plan to list Vietcombank shares at the HCM City Stock Exchange will also be discussed.
The listing is a part of the plan approved by the government to improve the position of Vietcombank in the capital market, heighten the transparency in corporate governance as well as to create liquidity for Vietcombank shares.
Vietcombank’s management board is expected to be authorised to go ahead with the listing plan, from selecting consultancy firms to following necessary procedures as stipulated by the laws.
The plan to list on the bourse will be made public after it gets approval from shareholders at the meeting. The listing, as previously planned, is expected to occur in June 2008.
After listing at the HCM City Stock Exchange, Vietcombank will also list its shares on foreign bourses. This issue will also be raised at the shareholders’ meeting on April 26, together with the issue of selecting foreign strategic partners for the bank.
After that shareholders’ meeting, Vietcombank, which has been known in Vietnam as a state owned bank, will shift to become operational under the mode of a joint stock bank.
Vietcombank has announced satisfactory business results for the first quarter of 2008, despite the big difficulties due to the tightened monetary policies. Its pre-tax profit was VND1,222bil, fulfilling 40% of the yearly plan.
In related news, Vietinbank, which was previously known as Incombank, is also moving ahead with its plan to make IPO.
JP Morgan has been chosen as the consultant for building up Vietinbank’s equitisation plan. It is expected that 25% of Vietinbank’s stakes will be sold to domestic and foreign investors at the IPO.
After the IPO, Vietinbank’s total assets are expected to reach VND180,000bil, including VND100,000bil worth of state owned capital. The bank may sell 24% more of stakes to the public by 2010 to reduce the state owned capital proportion to 51%. (TBKTVN)

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.