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VIETNAM International Joint Stock Bank (VIB) shareholders will vote on Tuesday (Jun 11) to lower the cap on foreigners’ holdings, a move which sources said may lead to the exit of its main overseas investor, Commonwealth Bank of Australia.
CBA, Australia’s largest lender, holds 19.8 per cent of VIB’s shares, according to VIB’s latest annual report released in March, making CBA the Australian bank with the biggest stake in Vietnam.
If a proposal from VIB’s board is approved by shareholders at Tuesday’s extraordinary meeting, the cap on the overall shares held by foreign investors would drop to 4.99 per cent of the bank’s charter capital, from the current 20.5 per cent, according to the public agenda of the meeting.
Vietnam applies a 30 per cent limit on total foreign investment in its banks, but lenders can apply lower thresholds.
VIB declined to comment on the reasons for lowering the cap. Two senior officials in Vietnam’s financial sector said the move may be meant to avoid the fragmentation of its foreign shareholding while the bank seeks a new strategic overseas investor.
The two sources and a third one familiar with the matter said CBA would sell its stake.
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Two of the sources were not certain whether a sale has been agreed but not yet carried out or whether it will happen at a later stage.
A CBA spokesperson said CBA had not sold its stake and did not comment on market speculation.
CBA has been the core foreign investor in VIB since 2010.
Under the VIB board’s proposal, the new cap would be applicable from the start of July but is not clear whether it would only apply to new investors – giving CBA a longer period to sell.
VIB is a midsize bank in Vietnam with a market capitalisation of US$2.2 billion.
As of December, VIB charter capital was worth about US$1 billion, which makes the CBA stake worth about US$200 million. The value of shares in a bank’s charter capital does not float, unlike shares traded on the stock market. REUTERS
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