IPO Plan for Four Leading Commercial Banks: Unchanged

 

Vietcombank was the first to kick off equitisation. After two years, the Bank for Foreign Trade of Vietnam has also reached the final steps and is waiting for government approval for its equitisation plans to carry out IPO by the end of August 2007.

Mr Vu Viet Ngoan, General Director of Vietcombank, said that it is impossible to determine the percentage of State stakes when the Government has not approved the equitisation plan. However, the total owner’s equity of Vietcombank, VND11,000 billion (US$687.5 million), will be kept unchanged. After assessing the value under international common practices, Vietcombank will not adjust its indexes on the books. Vietcombank’s equitisation plan is that state equities will be unchanged, but the bank will issue more shares to raise capital. Chartered capital of the bank will be the same, over VND4,300 billion (US$268.75 million) (Audited financial report in 2006). Vietcombank only registered to increase chartered capital when all shares are sold to the public, including shares for strategic partners.

 

Mr Tran Bac Ha, the first person to propose the Prime Minister review the rapid IPO launches of big enterprises in the last six months of 2007, affirmed that the Bank for Investment and Development of Vietnam (BIDV) will still carry out its equitisation plan and IPO in the fourth quarter of 2007. BIDV has signed a US$1.8 million IPO consulting contract with Morgan Stanley. Under the deal, BIDV and its consultant will value the bank and send it to the Government for approval in September 2007. At the same time, BIDV will choose strategic investors and a detailed equitisation plan, and will submit them to the Government for ratification before September 30, 2007. However, the IPO depends on the decision of the Prime Minister.

 

BIDV also announced its fundamental financial figures, such as total assets of VND158,219 billion (roughly US$10 billion), capital adequacy ratio of over 8 per cent and bad debt ratio of 4.46 per cent.

After BIDV signed a consultant agreement with Morgan Stanley, the Vietnam Industrial Commercial Bank (Incombank) inked an equitisation consultancy agreement with JP Morgan Securities Asia Pacific Limited under JP Morgan on July 12, 2007. 

Under the plan, Incombank and consultant JP Morgan will assess the value of the bank and build a detailed equitisation plan and roadmap for submission to the Government for approval in September 2007. After the detailed documents are approved, Incombank will complete all preparatory steps for the expected IPO in October and for the share listing. In the fourth quarter of 2007, Incombank will issue and list its shares abroad. The growth rate of equities and liabilities of Incombank is 17-18 per cent per annum in recent years. Bad debt is kept at less than 2 per cent of total outstanding debt. By late 2007, the bank targets to reduce it to less than 1 per cent. The book value of the Incombank is over VND9,000 billion (US$562.5 million).

 

Although the equitisation plan has not yet been ratified by the Government, the percentage of State equities at Mekong Housing Bank (MHB) and the owner’s equity of MHB, like Vietcombank, will be kept unchanged. After assessment under international common practice, MHB will define the proportion of State stakes and increase capital.

 

According to the internationally audited results in the past four years, MHB is a healthy, efficient and fast-growing bank. The current book value of MHB is VND1,000 billion (US$62.5 million). Chairman of MHB Directors Board Huynh Nam Dung said MHB is carrying out equitisation plans in parallel with Vietcombank. For the past two months Deutsche Bank AG Singapore has been assessing MHB. After the assessment, MHB will set up an equitisation plan to submit to the Government for approval in August 2007. MHB hopes the IPO will take place in October 2007. In mid-2008 restructuring will be complete.