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Lackluster interest in Military Bank shares offered by Vietcombank
Ngoc Thuy 08:47, 2018/10/10
At a starting price of VND19,641 (US$0.84) apiece, Vietcombank is expected to book proceeds of VND116.5 billion (US$5.01 million), much lower than the bank`s initial expectation of at least VND1.04 trillion (US$44.52 million), local media reported.
Investors have registered to purchase a meager of 5.93 million out of 53.4 million shares of the Military Bank (MB) offered by Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), according to the Hanoi Stock Exchange (HNX).
 
Illustrative photo.
Illustrative photo.
Overall, ten investors, including five individuals and five organizations, expressed interest in buying the said amount of shares. 

At a starting price of VND19,641 (US$0.84) apiece, Vietcombank is expected to book proceeds of VND116.5 billion (US$5.01 million), which is significantly lower than the bank's initial expectation of at least VND1.04 trillion (US$44.52 million).

The auction is scheduled to be held on October 15 at the HNX.

At the annual general meeting in 2018, Nghiem Xuan Thanh, Vietcombank's chairman, informed the bank's intention of divesting capital in other banks where Vietcombank holds more than a 5% stake, including MB and Vietnam Export Import Commercial Bank (Eximbank). 

The move is in line with the regulation on limiting cross holding. Under the regulation set by the State Bank of Vietnam (SBV), commercial banks are permitted to hold shares in a maximum of two other credit institutions, with the stake in each not exceeding 5%. The SBV requires banks to comply with its requirements before June 30 next year. 

Vietcombank currently holds a 6.97% stake or 150.6 million shares in MB, and an 8.24% stake or 101.2 million shares in Eximbank.

The sale of MB shares is supposed to help Vietcombank reduce its holding at the bank to 4.5%, which, however, proves quite challenging with the lack of interest from investors. 

At the close on October 9, MB's share value stood at VND23,050 (US$0.99) per share, down from the peak of VND36,800 (US$1.58) recorded on March 21. However, the current trading price is still higher than the Vietcombank's price on offer of VND19,641 (US$0.84) apiece. 

Vietcombank previously divested its shares in a number of credit institutions, including SaigonBank, Cement Finance Company (CFC) and entire shareholding in Orient Commercial Bank (OCB) on September 6. 

In the first six months of 2018, Vietcombank's pre-tax profit reached VND8 trillion (US$349.4 million), up 53% year-on-year, according to the lender's quarterly consolidated financial statement. 

As of June 30, Vietcombank's total assets were valued at VND977.6 trillion (US$42.7 billion), down 5.6% compared to the beginning of the year, mainly due to the bank's reduction in deposits at the SBV and other credit institutions. 
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