Key facts
- SMBC is in advanced talks to increase its stake in VPBank.
- The Japanese bank aims to raise its holding to approximately 20% from 15%.
- The transaction is targeted for completion this year.
- Valuation is a key point of disagreement in the negotiations.
- VPBank is seeking a substantial premium to its share price.
- SMBC acquired its initial 15% stake in 2023 for $1.5 billion.
Japan's Sumitomo Mitsui Banking Corp (SMBC) is in advanced negotiations to raise its ownership in Vietnamese lender VPBank to around 20% from its current 15% holding, according to people familiar with the matter. The deal, if completed this year, would deepen SMBC's presence in Vietnam's rapidly expanding banking sector.
Negotiations have been ongoing for months, with valuation emerging as a primary obstacle. VPBank is reportedly seeking a significant premium, similar to the approximately 40% above market value paid by SMBC in 2023 when it acquired its initial 15% stake for $1.5 billion. SMBC has expressed reluctance to pay such a premium and is considering open-market purchases as an alternative to a private placement.
An increased stake would provide SMBC greater access to Vietnamese consumers and businesses, aligning with Vietnam's economic growth targets and rising household wealth. The country's stock market was recently upgraded to emerging-market status by FTSE Russell, a move expected to draw foreign capital. In April, VPBank had indicated discussions with unspecified foreign investors for a private share placement, with one advisory firm estimating a raise of $700 million to $900 million.
SMBC's 2023 investment aimed to facilitate financial services for Japanese clients and multinational firms operating in Vietnam, a key manufacturing hub. The bank also sought to bolster VPBank's retail banking operations, including wealth management and credit cards. The potential ownership increase is also intended to improve SMBC's access to Vietnamese customers in insurance and credit markets.
Vietnam aims for annual growth of at least 10% through 2030, driven by infrastructure spending and consumption. Other foreign banks, including Japan's Mizuho Financial Group and MUFG Bank, and South Korea's KEB Hana Bank, hold minority stakes in Vietnamese lenders. VPBank has a higher foreign ownership ceiling of 49% due to its participation in the restructuring of GPBank.