Local media are being heated by the information that Sacombank has been acquired by Eximbank. Although many bank merger and acquisition deals are expected to be reached this year thanks to green lights given by authorities, this case comes as a surprise.
In a message widely known to the press, Eximbank said it had written authorisations granted by a group of shareholders representing more than 51 percent of shares with voting rights at Sacombank and required the latter to elect the entire management apparatus. Eximbank President Le Hung Dung affirmed that Eximbank had the right to convene an extraordinary shareholders meeting to re-elect to the Sacombank’s Board of Directors. Sacombank rejected to mention a conclusion because the shareholder list had not been recorded. This debate is left open.
The Hochiminh Stock Exchange (HOSE)-listed Sacombank (STB) is a relatively large lender with a registered capital of over VND10,000 billion. For years, foreign shareholders always keep 30 percent - the full room for foreign-held stake in a commercial bank. According to the document released at the Sacombank Annual General Meeting of Shareholders for the fiscal year 2011, biggest shareholders included REE (3.66 percent), Dragon Capital (6.66 percent), ANZ (9.78 percent) and Sacombank’s executives (9 percent).
Sacombank’s problem kindled from July 2011 when foreign investors announced plans to sell STB shares. In August 2011, Dragon Capital sold its all 6.66 percent, or 61 million shares, after it had kept for 10 years. Other major shareholders like Refrigeration Electrical Engineering Corporation (REE) and Australia and New Zealand Banking Group (ANZ) revealed their intentions to divest from Sacombank. Big STB share transfer deals were also struck during this time. Sacombank Chairman Nguyen Van Thanh transferred 15 million STB shares to Thanh Thanh Cong Company where his wife was the chairwoman. Then, sugar producer Sucrerie de Bourbon Tay Ninh (SBT) planned to purchase 7.5 million shares and two Thanh Thanh Cong Company’s subsidiaries registered to acquire 13.2 million shares. STB shares slumped to the low of all times at VND11,600.
By the middle of December 2011, Sacombank insisted on the plan to buy back 100 million shares for treasury shares and Mr Dang Van Thanh affirmed to continue with the buyback plan until the valuations reached the real value of no less than VND 20,000 per share. He also confirmed that no shareholder held more than 30 percent on the record date in August 2011.
In early 2012, Eximbank kept only 9.73 percent of Sacombank stake, mainly purchased from ANZ.
In fact, Sacombank’s leaders made defensive moves in the transfer of large-block shares to nip takeover threats in the bud. The Ho Chi Minh City-based lender requested its employees to authorise the management board, delayed the record date for shareholder list, and changed meeting agenda.
This move caused Eximbank to raise strong voice to the Sacombank management board by sending a written request demanding the entire re-election of Sacombank’s Board of Directors and the Supervisory Board. Sacombank’s shareholders elected the Board of Directors in the 2011-2015 in the past meeting, which was approved by the State Bank of Vietnam (SBV). The request for the entire re-election of the board is unprecedented.
However, this is absolutely possible. If Eximbank showed the evidence of shareholder group meetings to Sacombank, the former can replace most board members and executives of the latter.
Dr Nguyen Dai Lai at the State Bank of Vietnam said the buoy for Sacombank is the problems set in the group of shareholders authorising Eximbank. For instance, they do not keep STB shares for six straight months or more or they disagree on authorization contents.
But, Eximbank President Hung confirmed to the press that he had met with Sacombank’s leaders. Out of 51 percent authorised shares, Eximbank’s representatives hold at least 17 percent of shares in more than six consecutive months. And, according to the Sacombank Charter, a shareholder or a group of shareholders with at least 10 percent kept over six straight months may assign a member to the Board of Directors and the Supervisory Board. According to the Law on Enterprises, the Law on Credit Institutions, and Article 25 of Sacombank Charter, a shareholder or a group of shareholders owning more than 10 percent to less than 20 percent of shares with voting rights holds the rights to nominate at most one member.
Meanwhile, the counterweight at Sacombank is relatively weak. Excluding REE and Dragon Capital, the ownership of board members, supervisors and executives are approximately 9 percent.
This shocking acquisition will stay unclear until Eximbank discloses how they hold a large volume of STB shares: Silent acquisition or authorisation.
The ‘war’ to hold controlling power over Sacombank is escalating. This matter will be clear in April when the Sacombank Annual General Meeting is convened. This battle is also translated into STB share prices which rose from VND11,600 to over VND20,000.
At present, it is too soon to make a conclusion to either side: Eximbank or Sacombank. In the best scenario, big shareholders will send their representatives to the Sacombank Board of Directors to direct business orientations. The possibility of a legal battle should also be taken into account. Experts raise doubts over a legal fight related to acquisition. Litigation is not expected by any of 70,000 Sacombank shareholders but the conflict of interests may bring the case to court. The biggest loser will be Sacombank - an impressive commercial lender famous for friendly and good services for the business community and customers.
Le Minh
Vietnamese
