Banking sector in quagmire as SOEs can’t sell their shares in banks
Banking sector in quagmire as SOEs can’t sell their shares in banks
Investors have been reluctant to buy shares of banks, and as a result, state-owned enterprises (SOEs) cannot withdraw the capital they had previously invested.
The government has asked them to focus on core businesses and sell their stake in other businesses like banks by the end of 2015. The movement of withdrawing capital began in 2013, but SOE activity has not progressed well.
A report by the Ministry of Finance shows that the total investment capital of SOEs in the banking sector had reached VND15.2 trillion by the end of 2013.
They withdrew VND734.7 billion from banks in 2013. However, the capital withdrawal slowed down this year with only VND73 billion withdrawn in the first half of the year.
According to the National Assembly’s Economics Committee, the investment capital in commercial banks accounted for 60 percent of the SOE investment in the finance sector (insurance, securities and investment funds).
By the end of 2013, every one of the 10 existing state-owned economic groups had been found owning at least one commercial bank.
PetroVietnam was the biggest investor in banks. The oil and gas giant holds 52 percent of PVCombank’s shares and 20 percent of Ocean Bank’s shares, worth VND5.48 trillion in total.
Petrolimex, the petroleum importer and distributor, holds 40 percent of PG Bank’s shares.
The smaller investors include VNPT, a post and telecommunications group, which holds 8.95 percent of Maritime Bank; Vinalines, a shipping firm, which holds 1 percent of Maritime Bank; Vinatex, a textile and garment corporation, which holds 3.69 percent of National Bank.
2015 is the deadline for the SOEs to withdraw their capital invested in non-core business sectors, including finance and banking.
Vinalines has recently announced the sale of over 20 million of Maritime Bank’s shares through auction.
Meanwhile, PetroVietnam unexpectedly stated it would only complete capital withdrawal after 2015.
Deputy general director of PetroVietnam, Le Minh Hong, said at a recent meeting with the local press that the government has agreed on a delay to help PVCombank’s restructuring process.
As for Ocean Bank, PetroVietnam is still awaiting the State Bank’s reply on its capital withdrawal plan.
Few buyers
Though SOEs have repeatedly been urged by the government to speed up capital withdrawal, they have found it very difficult to do this as bank shares have become less attractive to investors.
According to VPB Securities, bank shares’ growth rate in the first nine months of the year was 5.5 percent, much lower than the average VN Index’s growth rate of 33.7 percent.
VCB Securities also commented that the transactions of bank shares was sluggish, with the liquidity at a moderate level and no big price fluctuations.
The shares of listed banks are traded with the average P/B (price to book ratio) of 1.2, i.e., 1.2 times higher than the book value. Meanwhile, on the OTC market (over the counter), most of the bank shares are traded at prices below the face value.
vietnamnet
