BIDV to select two foreign strategic partners prior equitisation

The Bank for Investment and Development of Viet Nam (BIDV) expects to select two multinational financial institutions as its strategic partners following equitisation, said Tran Anh Tuan, deputy general director at a press conference yesterday.
BIDV was expected to announce its strategic partners by September of this year, Tuan said, prior to mounting its IPO in the fourth quarter.

"The Government does not want us to select domestic institutions as strategic partners for BIDV as BIDV needs overseas experienced financial institutions to consult with the bank on technology, training and governance," said BIDV’s CEO Tran Bac Ha.
"I also think, to some extent, that foreign strategic partners are better," Ha added.
"The prices of shares to be sold to our strategic partners will be negotiated," Tuan noted, "although these prices must be at least equal to or higher than those offered in our IPO."
"We will list shares with Ha Noi Securities Trading Centre," said Ha. "It is very hard for me or other senior officials of BIDV to predict the prices of shares right now. Prices will depend on the market and on the attitude of investors."

A single foreign investor can hold only up to 10% of the shares in a domestic bank, although the State Bank of Viet Nam is revising a regulatory framework that allows a single foreign entity to hold up to 20% in a local bank. Total foreign ownership in a single bank is capped at 30%.
"I don’t think it will be necessary to sell out a 30% stake all at one time," Tuan said. "We will submit to the Government a detailed plan on selling shares."


As BIDV moves closer to equitising this year, several finalists have emerged in its search for a foreign consultant to guide the bank through the process. In the running as of last week were investment bankers such as Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS. BIDV was expected to name a consultant by June.

"We are trying our best to guarantee the interests of the State in the equitisation progress as many have expressed concern that the State could love interest in the phase of asset appraisal," said Tuan.

"We have drawn some lessons from the asset appraisals of Vietcombank and the Mekong Housing Bank, both of which faced many challenges for over a year in appraising the value of their assets."

The previous measure of determining the worth of the bank based on the value of existing assets would not be applied to BIDV, said BIDV deputy general director Le Dao Nguyen.

According to financial statements audited by Ernst & Young and based on International Financial Ratio Standards (IFRS), BIDV had total assets of VND158.22 trillion ($9.89 billion) at the end of 2006, up 34% on the previous year.

Last Thursday, Moody’s raised the credit capacity outlook of BIDV from ‘E’ to ‘E+’. The bank’s local currency rating remained at ‘Ba1 level’ and foreign currency deposit ratings also stood at ‘B1’.

Source: VNS