Deutsche Bank to buy 20 per cent stake in Vietnamese bank

Feb 2, 2007, 6:30 GMT

Hanoi - Deutsche Bank has signed a deal to buy a 20 per cent stake in one of Vietnam's fastest-growing private banks, local media reported Friday.

If state regulators approve the deal, Germany's leading bank would be the largest shareholder of the Hanoi Building Bank (Habubank), which has chartered capital of 1 trillion dong (62.5 million dollars), according Thanh Nien newspaper.

Financial specifics of the deal were not disclosed and bank officials in Vietnam were not available for comment on Friday.

Habubank, the country's sixth-largest joint-stock bank with 21 branches, reported total profits of 195 billion dong (12 million dollars) in the first 11 months of 2006, up 82 per cent over the previous year.

The Vietnamese bank plans to double its chartered capital to 125 million dollars this year, after raising it from just 18.7 million dollars to the current level in 2006, according to the bank's website.

The Deutsche Bank buy-in was the third major banking deal reported in Vietnam recently as foreign banks clamor to enter Asia's second-fastest growing economy as the communist country opens up its services market.

Only about 5 per cent of Vietnam's 84 million people have bank accounts, representing a huge potential market for banks that can reach consumers.

Vietnamese law now allows foreign companies to own only 10 per cent of local bank shares, but the regulations are widely expected to be relaxed to allow up to 20 per cent foreign ownership.

Last week, Singapore's UOB group announced it planned to double its share in Southern Commercial Bank (Sacombank) to 20 per cent, and HSBC confirmed plans to increase its shares in Vietnam Technological and Commercial Joint Stock Bank Techcombank, also to 20 per cent.