IFC to buy 10% stake in Vietinbank for $190 million

11 Oct, 2010

HA NOI — Vietinbank agreed yesterday to sell a 10-per-cent stake in the firm to International Finance Corporation (IFC) for US$190 million. The deal makes Vietinbank the first partly equitised State-owned bank to become part-owned by a foreign strategic investor. It made its initial public offering 22 months ago.

The price was set by the Government, the Ministry of Finance and the State Bank of Viet Nam.

IFC will support Vietinbank with technologies, international business development and management.

Viet Nam's largest partly-private lender announced yesterday its total assets at the end of August had risen nearly 30 per cent from the end of 2009 to VND320 trillion ($16.41 billion).

In the first eight months of this year, the Ha Noi-based lender raised more than VND290 trillion in deposits and lent VND199.5 trillion. Its bad debt stood at 1.05 per cent of all loans, below an annual target of 2.5 per cent for 2010.

The bank plans to pay a dividend of 20 per cent of its shares' face value of VND10,000 for 2010, higher than its initial target of around 15 per cent, the statement said, without giving profit figures for the eight-month period.

Vietinbank expects to increase its charter capital to VND23 trillion ($1.18 billion) by the end of the year, and the figure is slated to reach VND35 trillion ($1.8 billion) next year.

"By helping Vietinbank build up its capacity and strengthen its products and services, IFC will assist the bank in reaching more small – and medium-sized enterprises through its nationwide network," said Simon Andrews, IFC regional manager for Viet Nam, Cambodia, Laos, and Thailand.

"The proposed engagement will help Vietinbank further develop as a leading SME and underlines IFC's support for the Government's equitisation programme in the financial and banking sectors."

The Ha Noi-based bank also plans to sell a stake of 15 per cent to Canada's Bank of Nova Scotia to raise its registered capital by 35 per cent to VND15.1 trillion. The deal is expected to be finalised in December.

Shares of Vietinbank (coded CTG on the HCM City Stock Exchange) closed last Friday at VND18,700 per share.

Vietinbank went public in December 2007, becoming the first State-owned bank to do so.

However, it has struggled to find a foreign strategic investor. — VNS