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|KEB Hana Bank will use the acquisition to increase its footprint in Vietnam|
According to Resolution No.696/NQ-BIDV issued on July 22, 2019, BIDV will float more than 603.3 million new shares (or 15 per cent of its stake) to the Republic of Korea’s KEB Hana Bank. The deal will be valued at more than VND20.295 trillion ($882.39 million). The two banks will continue completing the required procedures to close the deal soon.
BIDV, one of Vietnam’s leading lenders by assets, has VND1.37 quadrillion ($59.57 billion) in total assets. It used to be on the Global 2,000 list of Forbes – an annual ranking of the world’s biggest and most powerful public companies – and had its credit rating upgraded from B to BB- by global ratings agency Standard & Poor’s.
KEB Hana Bank is a member of the Hana Financial Group – one of the largest financial corporations in Asia. Besides having a strong domestic network, the bank has set up 144 transaction points in 24 countries across the world. As of June 30, KEB Hana Bank’s total assets are worth $308.3 billion. Last year, it was recognised as the best retail bank in South Korea.
Acquiring BIDV’s shares will help the Korean bank expand its presence in the Southeast Asian country whose economic performance has been stellar for years, drawing in many Korean companies.
According to Vietnamese regulations, foreign ownership at Vietnamese banks is capped at 30 per cent of the charter capital. The state currently owns 95.28 per cent of BIDV's stakes. After the share sale to KEB Hana Bank, this will be reduced to 80.28 per cent.
Hana Financial said in a regulatory filing that the purchase of the BIDV stake will facilitate its entry into the Vietnamese market and secure sources for its mid- to long-term growth.
Vietnamese banks need as much as $20 billion in the run-up to the adoption of Basel II standards, scheduled for January 1, 2020, Fitch Ratings said in a note last week.
The stake sale is the latest large investment by a South Korean firm in the Southeast Asian country, after conglomerate SK Group in May agreed to buy 6.1 per cent of Vietnam's largest firm Vingroup for $1 billion.