South Korean financial group likely to invest in Agribank

Friday, Mar 01, 2019 15:22

Agribank has been urged to launch its IPO by the end of this year. — Photo Agribank

South Korea’s Nonghuypbank is looking at becoming a strategic investor in Agribank, which is due to make an initial public offering (IPO) at the end of this year.

Kim Gwang Soo, chairman of NongHuyp Group, which is the RoK’s No4 largest financial institution with seven subsidiaries in banking, investment and insurance including Nonghuypbank, proposed to support the restructuring process of the largest Vietnamese bank by assets during a recent meeting with its chairman, Trinh Ngoc Khanh.

Detailed proposals on the restructuring were not mentioned at the meeting, where the two sides also discussed plans to promote co-operative potential in the banking and non-banking sectors, such as investment in agriculture, rural areas and farmers as well as training.

Deputy Prime Minister Vuong Dinh Hue has recently also urged Agribank to launch its IPO by the end of this year.

Agribank is one of the State-owned banks in dire need of capital to meet the central bank’s Basel II regulations by 2020. The domestic capital market remains underdeveloped, so most banks are looking to foreign investors to meet the capital requirement.

According to Khanh, Agribank issued bonds worth VND4 trillion (US$171.7 million) last year to meet the capital demands of agricultural projects – one of the Government’s priority areas. He asked the Government to increase the foreign ownership limit to help State-owned banks increase capital. Currently, the foreign ownership cap for banks is set at 30 per cent of the banks’ total charter capital.

A recent report released by Moody’s also noted most Vietnamese banks would still lack sufficient capital to meet the Basel II requirements, so raising capital, primarily from foreign investors, would be a key focus for banks in 2019.

Moody has also forecasted despite the banks’ improved financial health, greater competition to attract private investments would make it more challenging for Vietnamese banks to raise capital this year.

Agribank is currently Viet Nam’s largest lender for the agribusiness sector, with 70 per cent of its over VND1,000 trillion outstanding loans funding the agriculture – fishery - forestry sector.

The largest Vietnamese bank by assets reported profit of VND7.6 trillion last year, while provisions for credit risks were estimated at VND20 trillion.

The bank’s non-performing loans kept at the Viet Nam Asset Management Company also dropped by over VND9.4 trillion to VND9.59 trillion in the first half of 2018, the bank’s latest audited financial statement showed. — VNS

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