The increased stake in Vietnam Technological and Commercial Joint-Stock Bank (Techcombank) will further solidify HSBC’s presence in the emerging market. HSBC is also the first foreign bank to receive approval for a 15% strategic investment in a domestic Vietnamese bank.
In April 2007, the Vietnamese government passed a decree to allow foreign banks to own 15% of a Vietnamese commercial bank, which may be then increased by a further 5% to 20% subject to approval from the Vietnamese government. As a result, HSBC intends to immediately subscribe for new shares in Techcombank to increase its stake to 15%. An application to the government will subsequently be submitted for a second tranche of shares to take its stake in the bank to 20%.
Vincent Cheng, chairman of HSBC, said: Raising our investment in Techcombank will allow us to expand our presence in one of Asia’s fastest growing economies, and reflects our focus on emerging markets. In addition to our increased shareholding, we plan to extend the technical service assistance we provide to Techcombank, and both parties intend to explore joint business opportunities. HSBC has committed $13.5 million to support the agreements on technical service assistance over a five-year period.
Vietnam has a population of over 84 million and has seen foreign investment grow by 55% in 2006 to a record high.
