Govt gives green light on Vietcombank equitisation

The plan on equitising Vietcombank was approved in principle by the government yesterday, Vietcombank’s leader confirmed this morning, saying that the official decision would be made next week.

The government has agreed to the proposals of international consultants and auditors relating to the bank’s appraisal in accordance with international standards. This means that Vietcombank’s appraisal process will be quick and in good order, while passing over some steps.

After the equitisation, the bank will be allowed to apply the corporate governance method in accordance with the best possible international standards, provided that these do not come contrary to Vietnam’s regulations. The decision by the government has helped remove investors’ worries that the equitised Vietcombank would be a ‘new decanter with old wine inside’ (i.e. Vietcombank will operate under the previously applied mechanism after the equitisation).

According to an official from Vietcombank, the government has been paying special attention to the selection of strategic partners. Under the previous plan, Vietcombank would set the timetable for making IPO first, and then define the selling prices of shares applied to strategic investors. But now the government has set higher requirements on choosing strategic investors and leaves the IPO timetable open. Vietcombank may choose strategic investors before making IPO.

The official stressed that the selling prices applied to strategic foreign investors would be independent from the IPO prices. Vietcombank will submit prices for strategic foreign investors for the government’s approval.

“Prices will not be the most important factor Vietcombank will rely on to seek foreign strategic investors. Vietcombank will highly rate the technical support, investment cooperation, and especially, the duration to hold shares after the listing,” the official said.

The government proves to be very ‘open’ when saying that if foreign investors make good commitments, the government will give preferences back to Vietcombank.

In special cases, foreign investors can hold more than the currently applied ceiling foreign ownership ratio of 15%, the official said.

Vietcombank has wrapped up the two rounds of negotiations with the short-listed bidders. It is expected that the partners will send the final offers one week after the government approves the equitisation plan. If so, Vietcombank will submit its ideas to the government on September 20, and will officially announce the foreign strategic partners in early October.

Source: VNE