Vietcombank fails to keep IPO timetable

The Vietnam Bank for Foreign Trade (Vietcombank) cannot make IPO prior to August 30 as previously planned as the government has not given the green light on the IPO plan.

Vietcombank announced in February 2007, right after it signed a contract with Credit Suisse on equitisation consultancy, that it would make IPO at the end of July or August at the latest, and have its shares listed on the bourse prior to the end of October.

However, Vietcombank Deputy Director General Nguyen Thu Ha on August 24 announced that Vietcombank would not be able to make IPO in August as it had not received any instructions from the government yet.

Last year and earlier this year, the government many times urged banks to speed up the equitisation process. However, it has not been hurrying banks since June, when the stock market began falling down. Analysts have also warned about the oversupply of commodities on the stock market causing losses to the state.

Owing to these warnings, banks themselves have been hesitating to put commodities on sale while the market is quiet with few transactions. The Bank for Investment and Development of Vietnam (BIDV), which volunteered to be equitised, has asked the government to reconsider the timing of the IPOs of big state owned enterprises. As previously planned, BIDV will complete its equitisation plan to be submitted to the government before the IPO is made at the end of the fourth quarter of the year.

The Vietnam Industrial and Commercial Bank (ICB), which also volunteered for equitisation, now is considering the re-timing of its IPO. ICB Director General Pham Huy Hung said that the bank "would do what the government instructed".

It is clear that Vietcombank cannot make IPO right in August, but Mrs Ha said that the bank would run the IPO as previously planned if the government approved, despite the gloomy market.

“The market now is not as favourable as previously, but we do not plan to delay IPO and the equitisation plan because of this. No one can know for sure how the market will perform later,” said Mrs Ha.

Vietcombank has every reason to be optimistic about its IPO plan. Several tens of international financial groups have expressed their desire to become Vietcombank’s strategic partners, when Vietnam’s first state owned bank becomes equitised. The five names which have been short listed for government consideration are all big names in the world.

Le Dao Nguyen, Deputy Director General of BIDV, said that bank shares were still being hunted by investors, especially shares of profitable and prestigious banks.

“We do not intend to make IPOs at any cost. Price will be an important factor to consider when offering shares, and enterprises all want to sell shares at the moment when prices reach peaks. However, it would be even worse if the auction prices are high, but the prices later decrease and no investor wants to buy them,” said Mr Nguyen.

Mr Nguyen said that BIDV was still hectically preparing for the equitisation and IPO.

In a report released on August 1 on Vietnam’s financial situation, the Hong Kong and Shanghai Banking Corporation HSBC said there was no need to worry about the IPOs of big banks. The sale of good commodities will help stimulate the market demand and attract new foreign investors.

Source: VNE