It is about to become the first foreign bank to hold a 20% interest in a domestic Vietnamese bank as it increases its stake in Vietnam Technological and Commercial Joint Stock Bank, better known as Techcombank, to 20% from 14.4% for a total consideration of Vnd1,272 billion ($77.1 million).
Techcombank will issue new shares, priced at Vnd60,891.52 per share, to raise HSBCÆs strategic investment to 20%. The transaction is expected to be completed by September 5.
For Vietnam standards, the deal has taken place quickly as HSBC only received approval in principle from the State Bank of Vietnam and Vietnamese Prime Minister Nguyen Tan Dung in July to raise its investment beyond the foreign ownership cap of 15%. The government is backing such increases as part of its commitment to opening the country to foreigners, which it agreed to do in exchange for entry into the WTO.
HSBC has been active in Vietnam and, in July, won FinanceAsia's 2008 country award as best foreign bank in the country.
"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," says Vincent Cheng, chairman of HSBC Asia-Pacific. "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."
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 the customers of both banks.
Techcombank is among VietnamÆs largest joint stock banks, with total assets of $3 billion as of July 2008. Headquartered in Hanoi, the bank currently operates through a network of 160 outlets in 30 provinces and cities in Vietnam. It 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 $30 million in its own branch network and business. The bank has two branches û one in Hanoi and one in Ho Chi Minh City û and a representative office in Cantho, as well as more than 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.
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