Bank shares are very much in demand

Bank shares are very much in demand VietNamNet Bridge – Despite the anticipated profuse supply, bank shares are believed to be sold well, once big domestic investors, including the powerful SCIC, have loosened the purse-strings.

Bank shares attractive?

As predicted, bank shares were sold badly in 2013 due to the oversupply. A series of state owned conglomerates have been trying to sell bank shares in their programs to withdraw capital from non-core business fields as told by the government.

Both the Electricity of Vietnam (EVN) and the Vietnam Airlines Corporation (VNA) tasted the failure in their auctions to sell 25.2 million ABBank’s shares and 24.033 million Techcombank’s shares, respectively, in August and September, 2013, because there was only one registered buyer.

The worry about the share unsalability was also the reason cited by PetroVietnam in explaining why it has been hesitant to sell Ocean Bank’s stakes. The Vietnam Post and Telecommunication Group (VNPT) also still cannot sell shares to withdraw its capital from Maritime Bank and Lien Viet Bank.

VNA kicked off the capital withdrawal process in June 2012, when it submitted the capital withdrawal plan to competent agencies. And it could only put shares into auction one year later.

However, the thorough and time consuming preparation could not help Vietnam Airlines succeed, though Techcombank is a profitable bank.

Dau tu chung khoan has quoted analysts as saying that it is not really attractive to invest in banks. In 2012, Ocean Bank’s post tax profit was VND243 billion, a sharp 50 percent decrease from 2011. Techcombank saw the post tax profit of VND765 billion, much lower than the VND3.153 trillion in 2011.

Banks still have not released their 2013 finance reports so far, but sources said their business performance in 2013 was even worse than in 2012. Especially, the high bad debt ratio (9 percent as stated by the State Bank and 15 percent as estimated by Moody’s) is thought to make bank shares less attractive in the eyes of investors.

SCIC will spend money to become big shareholder

However, contrary to all predictions, bank shares still can find good buyers. Geleximco has bought 25 million AB Bank’s shares from EVN, the move which analysts think would trigger a new wave of investments in domestic commercial banks.

ABB Bank has the chartered capital of VND4.2 trillion. EVN, which held 22 percent of AB Bank’s stakes, after the failure in August 2013, has successfully negotiated on the sale of 25 million bank shares to Geleximco, another big shareholder of AB Bank.

Geleximco accepted to buy the 25 million shares at the price equal to the face value, though AB Bank’s share market price was just 2/3 of the face value.

Thoi bao Kinh te Saigon has quoted its sources as saying that the State Capital Investment Corporation (SCIC), the powerful company specializing in making investment in businesses with state’s capital, would buy bank stakes from the state owned corporations to help speed up their capital withdrawal process.

According to Dau tu chung khoan, the total capital invested by state owned corporations in banks is roughly VND11 trillion.

Thoi bao Tai Chinh has reported that the government would release a resolution on the capital withdrawal from banks in February.

Kim Chi

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