Loss fears delay SOE divestment from banking

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Public firms, who have been ordered to pull out of the banking industry by 2015 but without losing on the stake sale, are finding it is a tough task to achieve.

Power distribution monopoly EVN owns a 20 percent stake in ABBank and has announced an auction on August 9 to sell its 25.2 million shares.

It has set the reserve price at par, or VND10,000, But ABBank's shares are selling at VND6,000-6,800 on the unregulated over-the-counter market.

PetroVietnamn will have to sell its 20 percent stake in OceanBank in the next two years.

The oil company's chairman, Phung Dinh Thuc, expects it to be a daunting task, saying banking and real estate are the two areas from which firms find it hard to pullout.

Oceanbank's shares closed at VND10,900 on July 17, down by half from two years ago.

Economist Nguyen Tri Hieu said the government needs a change in mindset and should accept losses if it wants firms to completely withdraw from non-core areas as critics have demanded.

"We should see this as the cost of restructuring of state-owned companies," he said.

At the end of 2011 state-owned firms' investment in non-core areas had stood at VND23.74 trillion (US$1.12 billion), half of it in banking.

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Le Dat Chi, dean of investment University of Economics HCMC, said the firms should seek permission to lower share prices if they are unable to find buyers.

He also said the government should look for solutions other than divestment that can prevent losses.

The State Capital Investment Corporation, the government's investment arm, can for instance take over EVN's stake in ABBank at the price expected by the utility, he said.

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