Banks scramble to divest crossholdings as stock market rebounds

By Le Chi   September 25, 2018 | 08:53 am GMT+7
Banks scramble to divest crossholdings as stock market rebounds
An employee counting money at a bank in Hanoi. Photo by VnExpres/Anh Tu

Vietcombank will auction a part of its holdings in Eximbank and Military Bank next month to comply with the SBV's cross-ownership requirements.

The lender said it will auction 45.6 million shares of Eximbank (EIB) on October 22. The minimum price it has set for the sale is VND14,497 ($0.63).

Vietcombank expects to get at least VND661 billion ($28.74 million) from the divestment.

The current price of Eximbank (EIB) on the stock market is VND13,800 ($0.6).

The lender also announced the auction of 53.4 million shares of Military Bank (MBB) on October 15 at a minimum price of VND19,641 ($0.85).

MBB and EIB are the last two of the credit institutions in which VCB owns more than a five percent stake. Its current holdings in these institutions are 6.97 percent and 8.19 percent respectively.

The auctions will take its ownership in the two banks to below five percent.

A senior Vietcombank official said the divestments were aimed at meeting the requirements of the State Bank of Vietnam's (SBV) Circular 36, which stipulates that banks cannot own more than five percent of other credit institutions or stake in more than two banks.

The circular, issued on February 1, 2015, gave local banks one year to comply with its provisions, but the task remains a work in progress.

Other lenders like VietinBank and BIDV have also been reducing their cross-holdings.

VietinBank reduced its stake in SaigonBank from 10.39 percent to 4.91 percent through a public auction late last year. Eximbank has also divested its eight percent stake in Sacombank.

In the past year, with the stock market rebounding, banks are quickly trying to complete their divestment at a good time. 

In the last trading session of 2017, the stock market had hit a 10-year high, reaching 984.24 points. It had not broken the 800-point barrier since 2008.

Nguyen The Minh, director of analysis at Yuanta Brokerage, told VnExpress the market would continue to rise in the short-term despite fluctuations on the international market. He expected the VN-Index to touch 1,100 points in the near future.

However, it is not easy for small financial institutions to divest. The central bank has suggested that the government should extend the divestment deadline to June 30 next year to give banks more time to find buyers for their holdings.

 
 
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