Vietnam — Vietnam’s banking industry is gearing up for an unprecedented capital-raising drive, with lenders preparing nearly $7 billion in share sales as strong economic growth fuels rising demand for credit.
The planned deals could amount to the largest capital-raising wave ever undertaken by Vietnamese banks, based on Reuters calculations using public disclosures and a Fitch Ratings report.
Vietnam recorded economic growth of nearly 10% in the latest quarter, increasing pressure on banks to supply financing to businesses and consumers.
The government is also advancing major infrastructure spending while targeting annual economic growth of at least 10% through 2030. At the same time, policymakers have started allowing greater foreign participation in parts of the banking industry that were previously restricted.
The ceiling for offshore borrowing rose 11% this year to $6.1 billion, while three Vietnamese banks have received approval to raise their foreign ownership limits to 49%.
Vietnam also gained an upgrade to emerging-market status from index provider FTSE Russell last month, a move that could increase the appeal of its financial markets to overseas investors.
Several major lenders are already working on potential transactions.
Sumitomo Mitsui Banking Corp, or SMBC, is negotiating with Vietnamese lender VPBank to raise its stake from 15% to 20%. VPBank is seeking a private placement worth $560 million at current market prices and has approval to increase its foreign ownership ceiling to 49%.
Vietcombank, Vietnam’s largest lender, has said it plans to sell 6.5% of its shares by the end of this year. At current prices, the transaction would be worth around $1.2 billion.
BIDV, the country’s second-largest lender, sold roughly 3% of its shares in March and intends to sell almost another 11% by the end of next year. The planned sales have a combined value of approximately $1.4 billion.
HDBank has likewise announced plans to sell a 10.7% stake by the end of next year, while Techcombank has held discussions with foreign lenders about a separate stake sale.
Vietnam’s economic expansion and the prospect of access to its growing consumer market are helping draw international investors.
The push to raise capital, however, also reflects the need for Vietnamese banks to reinforce their balance sheets. Lenders are moving toward stricter Basel III requirements by 2030 even as loan growth continues at a rapid pace.
Real estate accounts for roughly a quarter of all bank loans, while bad debts in the sector are increasing, according to an August internal report from Vietnam’s central bank.
Fitch has cautioned that the new capital may not significantly improve the financial strength of most banks because much of the funds are expected to be quickly put into new lending. As a result, the ratings agency said banks could require additional large capital injections in the coming years.
Vietnam’s financial-sector opening remains selective rather than representing a broad liberalization of banking. Still, the size of the planned share sales points to a notable shift as authorities seek more capital to help finance the country’s ambitious economic growth plans.
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