Vietcombank now holds less than 5 percent of the charter capital of MBB and EIB (Photo: Vietcombank) Hanoi (VNS/VNA) - The Joint Stock Commercial Bank for ForeignTrade of Vietnam (Vietcombank) has officially completed a plan to reduce itsholding ratio at other credit institutions to below 5 percent as required bythe central bank.
This week, the bank announced it was no longer a major shareholder of MilitaryBank (MBB) and Eximbank (EIB), holding less than 5 percent of the banks’charter capital.
The bank reduced its stake in MBB to 4.98 percent, equal to 107.5 million MBBshares, after selling 19.39 million shares on the stock market from December3-7.
Vietcombank’s holding at EIB was lowered to 59.5 million shares, or 4.84 percentof EIB’s charter capital, after offloading nearly 6.7 million EIB shares onDecember 6.
At a price of 22,000-22,500 VND per MBB share traded on the stock market fromDecember 3-7, it was estimated that Vietcombank earned 426-436 billion VND fromMBB divestment. The revenue from EIB divestment was estimated at some 96billion VND as EIB closed at 14,300 VND on December 6.
Offloading holdings at MBB and EIB was necessary for Vietcombank to comply withthe central bank’s Circular 36/2014/TT-NHNN, which allows commercial banks tohold shares in a maximum of two other credit institutions, with the stake ineach not exceeding 5 percent of the total equity of that institution.
Vietcombank has already finalised the divestment of all its holdings at Saigonbankand Orient Commercial Joint Stock Bank (OCB).
According to analysts, the favourable stock market and the country’s positiveeconomic growth have helped large banks, including Vietcombank, step updivestment from other financial institutions to meet the central bank’sregulation.
Banks also have to speed up divestment as the central bank has planned to applystricter measures to effectively prevent cross-ownership at commercial banks.
According to the central bank, it will impose harsh penalties on banks thatfail to meet the divestment deadline by bringing their ownership in othercredit institutions to below 5 percent before June 30 next year. Penaltiesinclude possible rejection of bank proposals regarding top positions, such asmembers of the board of directors and supervisory board and the CEO.
Non-compliant shareholders will also have their dividend rights and right toserve on the board of directors suspended, and will be prohibited fromincreasing their stake in their respective banks.
Expert Bui Quang Tin said the strict regulations on cross ownership werenecessary, as the practice has had a negative impact on the banking system,evident in the high ratio of non-performing loans.
Due to cross ownership, many banks increased their charter capital to severalthousand billions of Vietnamese dong; however, the source of the capital wasunreal as it came from loans taken from other banks. — VNS/VNA
This week, the bank announced it was no longer a major shareholder of MilitaryBank (MBB) and Eximbank (EIB), holding less than 5 percent of the banks’charter capital.
The bank reduced its stake in MBB to 4.98 percent, equal to 107.5 million MBBshares, after selling 19.39 million shares on the stock market from December3-7.
Vietcombank’s holding at EIB was lowered to 59.5 million shares, or 4.84 percentof EIB’s charter capital, after offloading nearly 6.7 million EIB shares onDecember 6.
At a price of 22,000-22,500 VND per MBB share traded on the stock market fromDecember 3-7, it was estimated that Vietcombank earned 426-436 billion VND fromMBB divestment. The revenue from EIB divestment was estimated at some 96billion VND as EIB closed at 14,300 VND on December 6.
Offloading holdings at MBB and EIB was necessary for Vietcombank to comply withthe central bank’s Circular 36/2014/TT-NHNN, which allows commercial banks tohold shares in a maximum of two other credit institutions, with the stake ineach not exceeding 5 percent of the total equity of that institution.
Vietcombank has already finalised the divestment of all its holdings at Saigonbankand Orient Commercial Joint Stock Bank (OCB).
According to analysts, the favourable stock market and the country’s positiveeconomic growth have helped large banks, including Vietcombank, step updivestment from other financial institutions to meet the central bank’sregulation.
Banks also have to speed up divestment as the central bank has planned to applystricter measures to effectively prevent cross-ownership at commercial banks.
According to the central bank, it will impose harsh penalties on banks thatfail to meet the divestment deadline by bringing their ownership in othercredit institutions to below 5 percent before June 30 next year. Penaltiesinclude possible rejection of bank proposals regarding top positions, such asmembers of the board of directors and supervisory board and the CEO.
Non-compliant shareholders will also have their dividend rights and right toserve on the board of directors suspended, and will be prohibited fromincreasing their stake in their respective banks.
Expert Bui Quang Tin said the strict regulations on cross ownership werenecessary, as the practice has had a negative impact on the banking system,evident in the high ratio of non-performing loans.
Due to cross ownership, many banks increased their charter capital to severalthousand billions of Vietnamese dong; however, the source of the capital wasunreal as it came from loans taken from other banks. — VNS/VNA
VNA
