July 22, 2019 / 10:50 AM / a month ago

South Korea's Hana Bank to buy 15% stake in Vietnam's BIDV for around $850 million

SEOUL (Reuters) - South Korea’s Hana Bank has agreed to buy a 15% stake in the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) BID.HM for 1 trillion won ($850 million), its parent Hana Financial Group (086790.KS) said on Monday.

BIDV, Vietnam’s second-largest listed bank with a market capitalization of $5.26 billion, said it will issue 603.3 million new shares for the stake sale. It pegged the deal value at 20.295 trillion dong ($874 million).

The stake sale is the latest large investment by a South Korean firm in the Southeast Asian country, after conglomerate SK Group in May agreed to buy a 6.1% of Vietnam’s largest firm, Vingroup JSC VIC.HM, for $1 billion.

Vietnam caps foreign ownership in local banks at 30%, but has allowed some overseas banks to open wholly-owned units.

Hana Financial said in a regulatory filing the purchase of the BIDV stake will facilitate its entry into the Vietnamese market and secure sources for its mid- to long-term growth.

Vietnamese banks need as much as $20 billion in the run-up to the adoption of Basel II standards, scheduled for Jan. 1, 2020, Fitch Ratings said in a note last week.

Vietnam’s Military Commercial Joint Stock Bank MBB.HM said last week it was seeking to sell a 7.5% stake to one or more foreign investors this year.

South Korea is the largest source of foreign direct investment in Vietnam, which has over recent years become a production base for several companies such as Samsung Electronics (005030.KS) and LG Electronics Inc (066570.KS).

Reporting by Ju-min Park and Khanh Vu; Editing by Muralikumar Anantharaman and Himani Sarkar

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