HSBC will become the first foreign bank in Vietnam to hold a 20% interest in a domestic bank as it increases its stake in Vietnam Technological and Commercial Joint Stock Bank (Techcombank) from 14.4% to 20% for a total consideration of VND1,272 billion (US$77.1 million).
The transaction follows the granting of special approval from the State Bank of Vietnam and Vietnamese Prime Minister Nguyen Tan Dung in July 2008 to increase HSBCs investment in Techcombank beyond the foreign ownership cap of 15%.
Vincent Cheng, chairman of HSBC Asia-Pacific, says: Techcombank is a key component of our dual strategy for growth in Vietnam, comprising investment in our own operations to drive organic growth as well as investment in strategic partnerships. We value the trust placed in HSBC by the Vietnamese government in allowing us to become the first foreign bank to hold a 20% stake in a domestic bank.
As many of our partners know, the group has always taken an active, rather than a passive, role in working with its strategic partners. While our increased investment will cement our growing relationship with Techcombank, we are also committing additional resources to help Techcombank in its growth and also contribute to the development of Vietnams financial markets.
In accordance with the agreement between the two parties, Techcombank will issue new shares, priced at VND60, 891.52 per share, to raise HSBCs strategic investment to 20%. The transaction is expected to be completed by September 5, 2008.
In addition to seconding specialist staff to Techcombank and sharing expertise and market knowledge, the two partners have also embarked on business co-operations such as a shared ATM network for both banks customers.
Techcombank is amongst Vietnams largest joint stock banks, with total assets of VND53 trillion (US$3 billion) at July 2008. Headquartered in Hanoi, the bank currently operates through a network of 160 outlets in 30 provinces and cities in Vietnam. Techcombank employs nearly 3,800 staff and offers a range of retail and commercial banking services.
HSBC is one of the largest foreign banks in Vietnam, having invested over US$30 million in its own branch network and business. The bank has two branches – one in Hanoi and one in Ho Chi Minh City – and a representative office in Cantho, as well as over 1,000 employees providing a wide range of corporate and personal financial services to a diverse customer base. It is in the process of locally incorporating its operations in Vietnam after obtaining in-principle approval from the State Bank of Vietnam.
