Bank for Investment and Development of Vietnam (BIDV) wants to issue 15 per cent of its shares to KEB Hana Bank, said in a document released recently seeking shareholders’ approval.
BIDV's market value is about $4.3 billion, meaning that South Korean bank has to spend $650-700 million to become BIDV's shareholder. Vietnamese lender will also issue 603 million shares to KEB Hana Bank in 2018 or 2019.
Earlier this year, South Korean media reported that KEB Hana Bank, a member of Hana Financial Group, was about to become a shareholder of BIDV and said the transaction was waiting for the authorities of Vietnam to approve.
In August 2017, BIDV signed a preliminary agreement with KEB Hana Bank but the contents of this agreement were not disclosed.
Hana Financial Group is the fourth largest bank holding companies in South Korea in terms of total assets, according to data by mid-2016. In Vietnam, KEB Hana Bank has two branches in Ho Chi Minh City and Hanoi with the capital at nearly $86 million.
BIDV has been equitized since 2011 but has not yet found a strategic shareholder. For many years, the State Bank of Vietnam (SBV) has owned over 95 per cent of BIDV. After the planned share sale to KEB Hana, SBV’s ownership will be reduced to nearly 81 per cent.
The bank intends to use the new capital for lending, investment and expanding its network. It expects profit before tax to be $398 million this year, up 7 per cent from 2017, with bad debt out of total loans under 2 per cent.
BIDV's total assets reached $54.4 billion in last September, surpassing Vietcombank and Vietinbank but its revenue in last quarter was much lower than Vietcombank's.
Looking for new resources to increase chartered capital is a very urgent race in the financial market in Vietnam in the context that Basel II standard is going to be applied officially.