While many domestic banks sell their shares to foreign banks to turn those banks into their strategic partners, Vietnam Eximbank has sold 6.42% of its shares, worth US$90 million to a local company, the Kinh Do Corporation.
The General Directors of Vietnam Eximbank and Kinh Do group talk with the press about this event.
In the time of integration why Vietnam Eximbank and Kinh Do group choose the way that seems to be ‘close’?
Vietnam Eximbank General Director Pham Van Thiet: Many foreign banks and foreign financial groups expressed their wishes to cooperate with Vietnam Eximbank but our policy is to have strong inner force before shaking hands with foreign partners. We can achieve that policy only when big shareholders of Vietnam Eximbank are powerful groups of Vietnam.
Tran Le Nguyen, General Director of Kinh Do Group: This is the first step of the financial investment strategy besides three other key investment fields of Kinh Do, including food, real estate, and retail service.
Kinh Do chooses Vietnam Eximbank because this is a prestigious and effectively operating bank, which has great potential for development since it has not listed its share in the stock market and doesn’t have the involvement of foreign investors yet.
What would each side benefit when they become strategic partners of each other?
Tran Le Nguyen: As of 2007 Kinh Do will invest strongly in real estate and those projects will be financed by Vietnam Eximbank. On the other hand, clients taking part in Kinh Do’s real estate projects will be able to use services of Vietnam Eximbank with higher credit limits within longer time compared to other banks.
Pham Van Thiet: for Vietnam Eximbank, it will benefit from Kinh Do’s opening of its account at the bank (the total revenue of Kinh Do Group in 2006 was more than VND2,000 billion or $125 million) and the bank can install its ATMs at more than 65,000 outlets of Kinh Do in Vietnam.
For Vietnam Eximbank’s loans to Kinh Do’s projects, Kinh Do’s ownership of 6.42% of Eximbank stocks worth nearly VND1,500 billion ($90 million) is a guarantee for both. If Kinh Do wants a volume of capital that exceeds the level that Vietnam Eximbank is allowed to provide, Vietnam Eximbank will come forward and call for capital contribution from other banks.
After Kinh Do, what strategic partners that Vietnam Eximbank will have?
Pham Van Thiet: I believe that future strategic partners of Vietnam Eximbank will be strong local economic groups, both private and state-owned ones.
The fact shows that this way of corporation is suitable and some other companies have used it, for example the recent strategic cooperation between the Phuong Nam Commercial Joint Stock Bank and the Saigon Trade Corporation (Satra).
$90 million and 6.42% of stocks, what do you think about those numbers?
Pham Van Thiet: The expectation of selling shares to foreign partners to have the best price, to improve prestige for the bank, to have technical support is right. However, it is actually difficult for Vietnam Eximbank to archive this expectation.
Meanwhile, with the participation of the Kinh Do group, Vietnam Eximbank immediately has more market shares, clients, products and its prestige is also improved. In terms of price, we can say that it is higher than those offered by foreign partners. As to technical aspect, once having strong inner force, we can easily hire world-leading experts.
Kinh Do has strategic partners like Prudential, Cadbury, Vina Capital and now Vietnam Eximbank. What is your point of view on cooperation?
Tran Le Nguyen: For Kinh Do, we will invest in the areas that we are not the expert in, for example financial investment. In my opinion, this is the time that Vietnamese big groups and companies need to join hands to boost their strength and their competitive advantage in negotiating and doing business with foreign partners.
Kinh Do group has three projects that will be carried out in HCM City:
- A VND1,727 billion ($107.94 million) project to build a 40 storey office building in the centre of District 1.
- A VND855 billion ($53.4 million) to build a complex of offices for lease, trade centers and high-class apartments on Cong Hoa Road, Tan Binh District.
- A VND1,390 billion ($86.875 million) to build luxurious apartments in Thu Duc District.
The Kinh Do Joint Stock Company and the Kinh Do Real Estate Joint Stock Company will invest around VND1,807 billion ($112.937 million) in those projects. The remaining capital will be raised by issuing more shares to sell to Kinh Do’s strategic partners and big investors.