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

Japan's Sumitomo Mitsui Banking Corp (SMBC) is engaged in advanced negotiations to bolster its ownership stake in Vietnam's VPBank, according to sources familiar with the discussions. The Japanese lender, a division of Sumitomo Mitsui Financial Group, is aiming to raise its holding from the current 15 per cent to around 20 per cent, sources said, without providing their names due to the sensitive nature of the information.

SMBC's initial investment in VPBank was made in 2023, valued at $1.5 billion. Both parties intend to finalize the transaction this year, although they are at odds over the valuation, multiple sources stated. The expansion of SMBC's stake would deepen its exposure to Vietnam's rapidly growing banking sector, providing better access to Vietnamese consumers and businesses as the country strives for rapid economic growth, rising household wealth, and increased foreign investment.

In April, VPBank hinted at exploring a private placement of shares with foreign investors. Following that, a Swiss advisory firm predicted that VPBank might raise between $700 million and $900 million from the sale of newly issued shares. At current market prices, a 5 per cent stake would be worth approximately $425 million. SMBC's involvement in Vietnam is driven by the country's status as a major hub for export-oriented manufacturing operations and its attractive prospects for infrastructure spending and rising consumption.

While foreign ownership in Vietnamese banks is typically capped at 30 per cent, VPBank has been granted an exemption of up to 49 per cent after participating in the restructuring of a troubled lender. SMBC's interest in increasing its ownership aligns with its strategy to provide additional financial services to Japanese clients and multinational firms operating in Vietnam, as well as bolstering VPBank's retail banking business, including wealth management and credit cards.