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Divestment slow off the blocks for banks

April 13, 2021 by www.vir.com.vn

SOEs must complete the sale of shares within four months, photo Le Toan

State-owned lender Agribank has been stuck for years with divestment efforts because its real estate assets could not be approved by the Ministry of Finance due to their large size and complex procedures.

“At the end of last year, the Ministry of Finance also made a comprehensive assessment on the equitisation goal of state-owned enterprises. Specifically, only about 28 per cent of enterprises were equitised, which means that nearly three-quarters did not meet the plan. The main issue is that many large corporations’ land use rights remain unclear, as can be seen in the cases of VNPT and Agribank,” explained Chu Manh Hung, deputy head of the Equitisation Department at Agribank.

“Since the equitisation plan during 2016-2020 has not been completed yet, Agribank will continue carrying out this task for the 2021-2025 period,” he added. “However, there are still major roadblocks hampering the process, associated with determining the value of land and affiliated enterprises.”

While Agribank has been constantly pushing the equitisation process, the complex valuation procedures have been a major obstacle slowing down progress. The bank also has to cope with the myriad challenges arising from its large number of affiliated enterprises, multi-level authorisations required, as well as delayed approval of land use schemes.

Agribank has a total of around 294 real estate properties with a total area of 2.6 million square metres, with diverse origins and incomplete legal documents. While these assets can help the bank’s equitisation value reach record levels and enhance its efficiency, they have also delayed divestment for years.

“Agribank currently has more than 100 land plots with unclear legal status. We hope to receive support from relevant units and agencies to quickly equitise this large volume of assets,” Hung told VIR.

Despite its ongoing equitisation, Agribank jumped 17 spots to rank 173rd in the recently-announced Brand Finance Banking 500 list for 2021, which featured the most valuable and strongest banking brands in the world.

As of December 31, Agribank’s total assets reached nearly VND1.57 quadrillion ($68.26 billion), with its capital exceeding VND1.45 quadrillion ($63 billion). According to Brand Finance, as governments scramble to stimulate economic growth in the face of the ongoing global health crisis, and profits and interest rates taking a hit, nearly two-thirds of the world’s 500 most valuable banking brands have recorded brand value losses.

As per Decree No.01/2014/ND-CP released in 2014 on foreign investors’ purchase of shares of Vietnamese credit institutions, a foreign strategic investor shall not hold more than 20 per cent of the charter capital of a Vietnamese credit institution. Foreign investors shall not hold more than 30 per cent of the charter capital of a Vietnamese commercial bank.

Besides Agribank, other local lenders have been enjoying the attentions of foreign partners looking to increase their footprint in Vietnam.

In 2019, a strategic co-operation between Vietnamese bank BIDV and South Korean KEB Hana Bank turned the former into the lender with the largest market capitalisation in Vietnam with around $1.73 billion. KEB Hana invested capital in exchange for a 15 per cent stake in BIDV, while BIDV received long-term technical assistance from the South Korean lender and its parent company, Hana Financial Group. The tie-up also quenched the bank’s thirst for capital as BIDV announced it has now satisfied Basel II requirements.

Elsewhere, Singapore’s sovereign wealth fund GIC in 2019 purchased over 94 million new shares and now owns a 2.55 per cent stake in Vietcombank. Mizuho, one of the largest Japanese financial services providers purchased an additional 16.6 million new shares to maintain its existing 15 per cent stake in the bank.

“The equity investment by GIC and Mizuho increases Vietcombank’s charter capital and creates a solid capital buffer for the bank to meet capital requirements under Basel II Accord as well as maintain its leading position in the Vietnamese banking sector,” a GIC representative stated.

Last year, the International Finance Corporation (IFC), a member of the World Bank Group reduced its stake in VietinBank by 1.5 per cent, following an earlier divestment.

The IFC and equity subsidiary IFC Capitalization Fund also reduced their combined ownership in VietinBank from almost 6.49 to 4.99 per cent last year, leaving more room for other foreigners.

Besides the IFC, Japanese financial institution Bank of Tokyo-Mitsubishi UFJ holds 19.73 per cent in the state-run bank. However, VietinBank has not signalled any new potential partnerships since IFC pulled out.

On the other hand, under Vietnamese regulations, state-owned enterprises (SOEs) must complete the sale of shares within four months of having their equitisation plans approved. This time limit may not be enough for overseas investors to conduct due diligence and negotiate representations and warranties, special rights, and other conditions for share acquisitions with the authority representing state capital in the SOE, according to ASCV Legal.

By Luu Huong

Vietnamese agriculture minister dreams of creating world-famous Mekong Delta brand

April 16, 2021 by tuoitrenews.vn

Vietnam’s newly-appointed Minister of Agriculture and Rural Development Le Minh Hoan is determined to boost sustainable development in the Mekong Delta, improve the lives of the region’s farmers, and market its products under an internationally recognized global brand.

In a recent discussion with Tuoi Tre (Youth) newspaper, Minister Hoan, who was ratified by the National Assembly on April 8, shared that his goal is to create “responsible agriculture” in Vietnam’s Mekong Delta.

According to Hoan, the expansion of the country’s agriculture sector may not be a strong indicator of income growth and quality-of-life improvements for Vietnamese farmers.

“Can we truly understand the lives of famers and their financial situations simply by looking at what the agriculture industry has achieved?” Hoan questioned.

Sustainable farming

During his tenure, Hoan hopes to create a balance between agricultural growth and the quality of life for famers while simultaneously managing the social and environmental impacts of development on farming.

In order to do this, his ministry plans to take a holistic approach to improving the agriculture sector, including considering the role of healthcare and environmental protection costs in developing sustainable farming.

“The agricultural industry should not be forced to ignore the environment, ecosystem, and public health in order to meet its growth targets,” he said, adding that the industry’s chase for high crop yields forces it to abuse chemical fertilizers and plant protection agents, which endangers public health and hurts the image of local brands.

Other problems noted by Hoan include the lack of updated market information and a loose connection between supply and demand which has led to wasted products or forced authorities to launch “rescue the famers” campaigns.

Such campaigns call on individuals and enterprises to purchase overproduced crops, such as the watermelons, purple onions, and oranges grown in Quang Ngai, Soc Trang, and Tuyen Quang Provinces, respectively.

Do not just exhort but give support

“In the past few years, we’ve managed to create a link between farm producers and investors in order to bring agriculture products to a wide variety of markets,” Minister Hoan said.

“Now it’s time to shift such a link to a value chain that ensures sustainable development.”

In a value chain, farm produce is classified and preliminarily processed before being supplied to markets.

This generates more jobs for workers and more income for farmers by creating preliminary treatment, preservation, and processing activities.

The uptick in revenue puts more money in farmers’ pockets, meaning fewer feel being forced to move to urban areas in search of more lucrative employment.

Regarding the role his ministry hopes to play in his vision for the industry, Hoan explained that government agencies at all levels should focus less on encouragement and more on educating farmers on agricultural economics in order for them to better understand the changing market.

Hoan also plans to focus his ministry on creating more outlets for both fresh and processed farming products.

“If the outlets are stagnant, production will come to a standstill,” he said.

The agriculture sector has long believed that the creation of outlets for farm produce falls under the responsibility of other industries and specialized agencies.

Such thinking must change and market solutions must be included from the beginning of any agricultural product development plan.

A global ‘Mekong Delta’ brand

Regarding the challenges that climate change and limited infrastructure pose to agriculture, Hoan declared the first step in overcoming these obstacles is to push the sector toward a nature-based production model.

Such a switch will be based on Government Resolution 120, which is centered on the sustainable development of the Mekong Delta in response to climate change, Minister Hoan explained.

After famers have been educated on agricultural economics, they will begin to understand higher produce quality, as opposed to higher yields, can provide hefty long-term benefits and pave the way for strong brands, reputations, and profits.

At the same time, the industry must adopt an ecosystem-based development strategy which satisfactorily resolves the issue of promoting agricultural production on the basis of adaptation to climate change, the minister said.

Such adaptation includes not only boosting infrastructural development but also adjusting agricultural thinking and operation systems on both provincial and district levels throughout the delta.

Doing so, Hoan further explained,will help the Mekong Delta transform into a global brand capable of surviving climate change and other likely challenges.

Clean agriculture

Minister Hoan’s primary focuses for his tenure rely on the idea of “responsible agriculture” – agricultural development that does not abuse chemical fertilizers and plant protection agents.

He shared that he once asked farmers in Dong Thap Province whether or not they overused chemical fertilizers and plant protection agents in farming production and they just chuckled in response.

The practices of “two-bed vegetables” – one bed of clean vegetables for growers to eat and the other, fed with chemical fertilizers and plant protection agents, for sale – and “two-cage pigs,” one cage of clean swine for breeders and the other, bred with weight gain or leanness-enhancing agents, for sale, are still common in certain areas across the country.

He also blamed excessively intensive farming of up to three paddy crops per year for gradual farmland deterioration because the practice requires farmers to use more chemical fertilizers and plant protection agents.

As such, the practice has harmful long-term impacts on both human health and the land, water, and air.

The Mekong Delta, which has 13 administrative units, including a centrally-run city (Can Tho) and 12 provinces, covers 40,547.2km² and has a total population of over 17.2 million people, accounting for 13 percent of Vietnam’s area and nearly 18 percent of the country’s population, the General Statistics Office of Vietnam reported in 2019.

According to the Planning Department under the Ministry of Agriculture and Rural Development, the delta accounts for about 40 percent of Vietnam’s total value of agricultural production. The corresponding proportions of rice, fisheries, and fruit output are 50, 65 and 70 percent.

The region also makes up 90 percent of the country’s total rice exports.

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Citi Vietnam wins Digital Bank of the Year award

April 14, 2021 by www.vir.com.vn

Citi Vietnam’s mobile-first strategy empowers customers to do the majority of their banking needs remotely

Citi was also named Digital Bank of the Year in the Asia-Pacific as well as Hong Kong, India, Indonesia, South Korea, Thailand, Bahrain, and the UAE in The Asset’s Triple A Digital Awards 2021.

Separately, in the magazine’s Triple A Sustainable Capital Markets Regional Awards, Citi was named Best Bank in the Asia-Pacific.

“These awards represent exceptional recognition of our team’s focus on delivering solutions across the Asia-Pacific through a time of challenge. We thank our clients for the trust they place in us every day, and we are excited about continuing to support and grow with them,” said Peter Babej, CEO, Citi Asia-Pacific.

The Digital Awards 2021 logo

In Vietnam, Citi’s mobile-first strategy empowers the customers to do the majority of their banking needs remotely. In Vietnam, the customers all but one have opted for e-Statements, and more than 60 per cent of them are active using Citi Mobile App and Citibank Online.

Despite the ongoing pandemic, Citi’s award-winning online banking platform for corporate and institutional clients – Citi Direct BE – has enabled clients to continue with their core banking activities.

In consumer banking, during the COVID-19 period, Citi partnered with the biggest e-commerce sites in Vietnam to bring more discounts for customers. Citi cardholders could also use their points to pay directly for several transactions. Citi is proud to be the only bank in Vietnam that offered such digital features to cardholders. In April 2021, it is also the first bank in the market to launch some prominent features on mobile application including Citi Pay with Points, Cash Rebate, Booking Installment Plans.

“Our global mission is to ‘Be the Best’ for our clients and this is the cornerstone of our digital product development roadmap for both corporate and individual clients,” said Thuy Lai, Citi Vietnam interim country officer.

By Dinh Thuy