Japanese bank SMBC terminates strategic partnership with Eximbank

Sumitomo Mitsui Banking Corporation, which holds a 15% stake in Eximbank, has terminated its strategic partnership with the Vietnamese bank ahead of time, after 14 years of cooperation, Eximbank's chairwoman said Friday.

"SMBC has not yet withdrawn its capital and remains a major shareholder in Eximbank. But the corporation already ended the strategic partnership," said chairwoman Luong Thi Cam Tu.

Tu was responding to a shareholder's question at the creditor's annual general meeting on Friday over the risks of tremors that the withdrawal could cause Eximbank.

Under the law, a foreign bank can buy up to a 15% stake in a Vietnamese bank as a strategic partner who could then become involved in corporate governance and is expected to bring breakthrough changes to the Vietnamese bank. The aggregate foreign ownership is capped at 30% as banking is considered a sensitive business area.

This is Eximbank’s first successful shareholder meeting since 2019, following its arrangement of a new management team and board of directors earlier this year.

During the meeting, shareholders were interested in whether the creditor could handle shareholder conflicts in order to strengthen its development.

Tu affirmed that the board of directors is authorized to represent shareholder groups. "There are no interest groups participating in Eximbank's activities that govern and affect its operations. The new board will share the bank's best development goals, including shareholder interests."

Many shareholders urged the bank to return to its previous operational trajectory, aiming for a top-10 ranking in the sector.

"As Eximbank currently lags too far behind other banks, we look forward to shareholder support in resuming its development trajectory,” Tu stated.

The lender planned to double its profit before tax to VND2,500 billion ($107.8 million) in 2022, with total assets climbing by 7.9% to $7.72 billion at the end of the year.

Shareholders are skeptical about the target of doubling profits given various impediments like a tightened corporate bond market, limited real estate credit, and rising interest rates.

However, the bank's leader expressed confidence in this year's profit objective as a result of capital source restructuring, bad debt recovery, and promotion of additional income sources other than credit.

It also planned to raise chartered capital from VND12,355 billion to VND14,814 billion ($638.6 million). The additional funds are set to be utilized to invest in infrastructure, headquarters, and technology, as well as to expand Eximbank's business.

Shareholders have approved the construction of Eximbank's head office at 7 Le Thi Hong Gam street, Nguyen Thai Binh ward, District 1, Ho Chi Minh City, with its own capital.

The lender planned to issue more than 245 million shares to pay a dividend of 20%. The payment is set to be made in 2022 after the approval of competent state agencies.

However, two submissions were rejected by shareholders, including a report on the outcomes of the transfer of Sacombank shares and an amendment permitting the inclusion of a general director or chairman during the vacancy.