Vietnam warns against trading some bank shares
HANOI - Vietnam warned investors on Thursday to steer clear of shares in four banks which have been non-operational for years, and to avoid a grey market in stock of banks that have yet to win a trading licence.
Amid talk that one of the four, Viet Hoa, may soon re-open its doors after a run on deposits closed it down in the late 1990s, the central bank moved to protect investors from themselves in the red-hot financial sector.
"Recently the central bank has received much information about trading of shares in banks which have been placed under special surveillance or had their licence revoked, and trading the right to buy shares of banks which have not been licensed," the central bank said in a statement.
It named four out of 38 partly private banks which were non-operational as of the end of January as Viet Hoa, Nam Do, Vung Tau and Asia-Pacific banks.
"... trading shares in these banks at this time has not sufficient legal basis", the statement said.
Trading in shares of partly-private banks has been active on Vietnam's unregulated markets after sound results in 2006 and high dividend payments of up to 50 percent in some cases, brokers said.
On the regulated market, Sacombank and Asia Commercial Bank are the only available financial investment, and their surging share prices have helped take the Ho Chi Minh City and Hanoi benchmark indexes to record highs in recent weeks.
The central bank said several organisations and individuals had plans to establish new banks, which it named as Van Phong, Tin Nghia, Lien Viet and the Oil and Gas bank, but it said the central bank has not yet licensed their operation.
The prices of bank shares have also been lifted amid moves by foreign banks to buy stakes, and as five five state-run banks have been ordered to conduct initial public offerings this year and in 2008.
Next Monday state-run Bank for Foreign Trade, Vietnam's second-largest bank, will sign a contract to hire global investment bank Credit Suisse to advise on its partial privatisation, banking officials said.
Deutsche Bank has been picked to advise state-run Mekong Delta Housing Development Bank for its IPO, State Bank of Vietnam Deputy Governor Phung Khac Ke told Reuters on Tuesday.
The selection of foreign consultants takes communist-run Vietnam further in its reform of the banking sector after it joined the World Trade Organisation last month.
Last Thursday, Deutsche Bank said it had agreed to buy 20 percent of stake at an undisclosed value in Hanoi Building Bank, Vietnam's sixth largest partly private commercial bank.
HSBC Holdings Plc. plans to spend $71.5 million to double its stake in Techcombank to 20 percent once it is allowed to do so.
The government is expected to soon double the foreign ownership curb for an individual investor in a local bank to 20 percent.
Citigroup , Standard Chartered , ANZ , Oversea-Chinese Banking Corp. , BNP Paribas and United Overseas Bank also have business interest or hold up to 10 percent of stake in a Vietnamese bank.
Reuters - February 8, 2007.
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