Exclusive-Japan's SMBC in talks to increase stake in Vietnam's VPBank, sources say

Japan's Sumitomo Mitsui Banking Corp (SMBC) is reportedly engaged in advanced negotiations to increase its ownership in Vietnam's private bank VPBank, according to multiple sources familiar with the discussions. SMBC, which currently holds a 15% stake in the bank, is aiming to raise its position to around 20%, sources revealed, without providing their identities due to the confidential nature of the information.

The initial investment by SMBC in VPBank took place in 2023, valued at $1.5 billion. Both parties are aiming to finalize the transaction this year, however, they are currently at odds over the valuation of the bank, sources indicated.

The expanded stake by SMBC would provide the Japanese bank with increased access to the fast-growing banking sector in Vietnam, a country that is targeting rapid economic growth, rising household wealth, and increased foreign investment.

VPBank is reportedly seeking a significant premium for its shares, in line with the 2023 transaction where SMBC paid about 40% above market value. SMBC has been hesitant to pay this premium and has considered increasing its holding through open-market purchases instead of a private placement.

Foreign investment in Vietnam's banking sector is generally capped at 30% for individual investors and 49% for an individual or its affiliates, although VPBank is an exception with a higher foreign ownership ceiling of 49% after participating in a restructuring of a weaker lender.