“Zero” banks seek their own way

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Oceanbank is one of three “zero” banks looking to restructure. Photo: Internet.

Attention from foreign investors

In the banking system, there are three "zero” banks including Ocean Commercial One Member Limited Liability Bank (OceanBank), Construction Commercial One Member Limited Liability Bank (CBBank), and Global Petro Sole Member Limited Commercial Bank (GPBank). In a recent report to National Assembly deputies, the State Bank of Vietnam (SBV) said they have directed them to complete their restructuring/recovery plans. The banks have sought partners and negotiated with domestic and foreign investors wishing to participate in their restructuring. Up to now, the SBV has submitted to the Prime Minister for approval the plan to restructure Oceanbank. In the case of CBBank, the State Bank has collected opinions from ministries and agencies on the draft restructuring plan.

At the meeting between Deputy Prime Minister Vuong Dinh Hue and Nobiru Adachi, Senior Managing Director, Executive Officer of J Trust Group (Japan), at the end of March this year, J Trust expressed desire to participate in the restructuring process of weak credit institutions and banks in Vietnam, including CBBank, to make a gateway for Vietnamese enterprises to cooperate and invest with Japanese enterprises. Therefore, the Deputy Prime Minister said the Government wanted to find a partner to transfer or sell CBBank to restructure it, so J Trust should discuss with CBBank and the SBV on the plan. Similarly, Clermont Group (Singapore) also wants to participate in the restructuring process of Vietnam's banking system.

This is good news for the restructuring process of the banking system, showing that the process is effective and on the right track. However, the SBV has to admit the restructuring of these three banks is difficult, complicated and unprecedented, requiring close coordination and consultation with many ministries and agencies and it depends on the outcomes of negotiations with investors.

Find a way to save themselves

In reality, not only “zero” banks but also many weak credit institutions are in the "sights" of foreign investors. According to experts, the main factor for many big investors targeting “zero” banks is the restructuring of Vietnam's banking system has achieved positive results, and because investors want a chance to penetrate Vietnam's financial and banking market through these banks. However, information about the operation of these three banks is very rare or sketchy.

Over the past three years, GPBank has not published any specific figures about its business activities. The most recent information is that by the end of 2015, GPBank's capital mobilisation reached over VND20,900 billion, an increase of 30 percent compared to the time before being purchased by the SBV. In 2015, GPBank recovered VND600 billion of overdue debt; its average loss from July 2015 to the end of 2015 decreased by 38 percent compared to before being acquired. According to the State Audit report submitted to the National Assembly in 2017, by the end of 2016, the bad debt ratio at the three “zero” banks was very high. GPBank's bad debt was VND2,800 billion, accounting for 59.32 percent of outstanding debt. Oceanbank’s bad debt was VND14,234 billion, accounting for 72.25 percent of outstanding debt. CBBank’s was VND18,073 billion, accounting for 95 percent of outstanding debt (excluding debt from financial institutions and credit institutions).

Therefore, the deals have not got final results, most of them are just desires from both sides. Therefore, there is a bank making a plan to "save itself". Of the three "zero" banks, GPBank has offered to sell 100 percent of its shares to foreign partners many times, but luck has not come to this bank.

According to GPBank, it is looking for qualified investors who can meet conditions prescribed in the Law on Credit Institutions and other laws to participate in its restructuring. The deadline for investors to submit the restructuring plan is December 16, 2019. Accordingly, GPBank became the first Vietnamese bank to issue a specific notice on seeking partners to restructure after eight years of restructuring. Before that, when GPBank was forced to restructure in 2012, there was information on selling 100 percent of GPBank's shares to a foreign partner. However, by early 2015, it was indirectly informed that this plan did not come to an end. After that, the foreign partner from Malaysia did not finalise the plan to buy GPBank.

Obviously, the lack of transparency in these banks’ operations as well as many strict regulations in the capital selling has slowed investors down. Therefore, the above problems must be removed to solve the “zero” banks’ difficulties quickly, helping them develop in accordance with set strategies, no longer being "rocks" to block the development of the whole system.