The 26 unlisted commercial banks have been delaying their plans to list shares on the bourse, though they have been pressured to do this as soon as possible.
Prime Minister Nguyen Tan Dung, speaking at a 2013 banking conference, stated that all joint stock banks must list shares on the stock market to keep their operations transparent, and help resolve the issue of circular ownership, a big problem of the banking system.
However, banks don’t intend to fulfill the requirements right now. The hottest topics raised at banks’ shareholder’s meetings were personnel changes, bad debts and slow credit growth. Listing shares was not on the agenda of the meetings.
Nine commercial banks have listed their shares on the stock market so far. These include Vietcombank, Vietinbank, BIDV, the banks in which the State holds the controlling stakes, some big joint stock banks – namely ACB, Eximbank, Sacombank, MBB, and SHB – and one small bank, Navibank.
The total face value of the listed shares is VND134 trillion. The figure would be VND150 trillion higher if all the other 26 banks were to also enter the bourse.
Before Western Bank merged into PetroVietnam Finance Corporation (PVFC), the two financial institutions affirmed they would list shares once the restructuring process was complete.
However, a representative of PVCombank, the new bank created by the merger, has said that listing is a “plan for the next two years”, and that the bank is not considering listing shares at this moment.
Analysts said the banks’ unwillingness was foreseeable. Banks cannot see any benefits in listing. They don’t need to mobilize capital now through share issuances. At the same time, the forecast declines in profit would make it difficult to attract investors.
When asked by shareholders about the listing plan, Dong A Bank’s CEO said that what Dong A needs to do now is restructure the bank and look for foreign strategic shareholders.
The CEO said that banks generally target two goals when listing shares – improving their shares’ liquidity and ensuring the transparency of their operations. Meanwhile, Dong A Bank’s shares still can be traded well through a securities company which is managing the shareholders’ books. The CEO also asserted that Dong A’s operations have been run transparently so far.
While the majority of banks do not want to present themselves on the bourse now, other banks have been unable to meet the requirements of eligibility for share listing.
One of the requirements is that the bad debt ratio of the banks must be lower than 3 percent of their total outstanding loans. This is believed to be a challenge for those banks which have just finished restructuring, or are undergoing the process.
A senior official of the State Securities Commission (SSC) said the watchdog agency is running a program to provide more “goods” to the stock market in 2014.
He said SSC has got some initial agreements with the State Bank of Vietnam on requesting commercial banks to list shares on the bourse.
The director of a foreign investment fund said he does not think Vietnamese bank shares would attract foreign investors, aside from big financial institutions which plan to jump into the Vietnamese finance market through the injection of capital into banks.