DongA Bank, one of the mid-sized lenders in Vietnam, is seeking the government’s permission to sell 49 percent of its shares to foreign investors to raise money for its restructuring efforts.
Tran Phuong Binh, CEO of the Ho Chi Minh-based bank, was quoted by local media as saying that that its operation “has not been good” since the burst of the property bubble several years ago. Its bad debts reached 6 percent of total loans at times.
He said several foreign funds have expressed interest in buying a 49 percent stake worth VND4.9 trillion, or nearly US$222 million.
“If the plan is approved, foreign investors will become strategic shareholders of DongA,” Binh said, adding that they will help the bank reduce its bad debt.
Vietnam currently caps foreign ownership in local banks at 30 percent.
Binh said he is asking for an exception and he expects to receive a response in three to four months.
DongA reported pretax profits of more than VND102 billion ($4.75 million) during the first six months, down 64 percent from the same period last year.
It was reportedly trying to sell a 10 percent stake to Kinh Do, a local confectionery company, but the deal has apparently falling through.
Vietnam’s government has been arranging mergers and acquisitions in a bid to restructure the overcrowded banking sector.
The central bank has taken over several weak banks itself.