Healthy domestic banks should focus on improving the transparency in their audited financial statements to attract foreign investors as some banks have recently succeeded with the strategy, experts suggested.
Recently, the market has seen the shares of some banks, such as Techcombank and VPBank, draw large interest from foreign investors.
At the beginning of June, the stock market witnessed one of the hottest listings in 2018 with great attention by foreign investors when Techcombank (coded TCB) listed on the bourse at VND128,000 (US$5.61) per share.
Techcombank CEO Nguyen Le Quoc Anh attributed the deal’s success to the bank’s efforts in improving the transparency in its audited financial statements.
According to Anh, Techcombank started to prepare for the listing three years ago, and the bank only targeted major foreign investors.
The first thing the bank did to implement the plan was to prepare its financial statements in 2015, 2016 and 2017 in line with the international financial reporting standard, Anh said, adding that the bank had invited professional international organisations to review its entire operation process and legal basis to ensure its best compliance.
According to industry insiders, the registration to purchase Techcombank shares from foreign funds was huge with positive prices, thanks to the implementation of the highest international standards in the sales plan to prove the bank’s quality.
The improvement in its financial statement had also helped Techcombank receive an investment of US$370 million from two funds managed by the US-headquartered private equity firm, Warburg Pincus.
The same development was also seen at VPBank (coded VPB). The bank’s shares were successfully listed on HCM City Stock Exchange at VND39,000 ($1.7) apiece, exceeding Vietcombank and becoming the most expensive and hottest bank stock in the country’s stock market last year.
At that time, the market was concerned with one question: Whether VPB shares were listed at too high a price? However, thanks to the information and operation transparency as well as to efforts in investor relations, the bank successfully attracted large foreign investors.
Richard Fitton, head of the Investment Bank division of the Viet Capital Securities Company, which was the listing consultant for VPBank, told tinnhanhchungkhoan.vn that international investment funds spent at least a month to analyse the financial and operational situation of VBBank before deciding to invest in its shares.
More transparent, more attractive
Banking expert Nguyen Tri Hieu said not only in Viet Nam but in almost all other countries around the world, all financial statements of banks and businesses were independently audited by the world’s leading companies. Financial statements with transparent, clear and detailed information, especially in explanation and clarification, attract investors as it creates confidence in them, he added.
However, Hieu noted that while the above standards were popular in the world, financial statements in Viet Nam were normally inadequate, especially when it came to explanation about non-performing loans, debt classification, loan loss provision and bad debt recovery, which foreign banks and investors put great attention to.
VPBank, Techcombank and some other local banks have paid attention to making their financial statements transparent and thorough and have not hidden important facts, which contributed to building the bank’s prestige and attracting the attention of foreign investors, Hieu said.
As many banks are planning to list on the stock market to increase capital to meet the central bank’s requirement on capital adequacy ratio under Basel II standard, Hieu suggested that healthy banks should focus on transparency in their financial statements to keep their stock price at the right value, which may also give large added value.
State Bank of Viet Nam (SBV) governor Le Minh Hung said to help investors better understand the condition of banks, SBV will ask financial organisations in near future to make their periodically audited financial statements public and list them on the stock market. — VNS