Vietnam’s VPBank nears $1.4 billion stake sale to Sumitomo Mitsui Financial Group’s unit

Vietnam Prosperity JSC Bank, known as VPBank, is reportedly in the final stages of a deal to sell a 15% stake to Sumitomo Mitsui Financial Group’s unit, SMBC Consumer Finance Co., for approximately $1.4 billion. The bank will sell more than 1 billion shares to the unit at a price range of 32,000 dong ($1.35) to 33,000 dong each. The deal is expected to be finalized later this month.

VPBank is one of the largest private banks in Vietnam, offering a range of services such as retail, corporate, consumer finance, and wealth management operations. It has total assets of more than 631 trillion dong as of December 2022. The strategic sale of a 15% stake to a Japanese financial institution is aimed at replenishing the bank’s capital and expanding its operations further.

The investment by SMFG unit SMBC Consumer Finance Co. marks Japan’s latest foray into Vietnam’s banking sector, as Japan’s top banks are investing billions of dollars in Asia to cater to the region’s rapidly expanding middle class. In November 2022, Sumitomo Mitsui agreed to buy an additional stake in the Philippines-based Rizal Commercial Banking Corp. for about $460 million.

The deal, once finalized, will enable VPBank to leverage Sumitomo Mitsui’s expertise in the banking sector, which could prove to be beneficial for VPBank’s growth trajectory in the long run. This is not the first time Sumitomo Mitsui has invested in a Vietnamese financial institution. In the past, the company had acquired a 49% stake in Vietnamese consumer lender FE Credit from VPBank.

The bank’s net income surged 55.6% to 18.2 trillion dong last year, and its shares have risen just over 2% this year, valuing the lender at around $5.2 billion and making it the fourth-largest in the country by market value. The sale of a 15% stake to SMFG unit SMBC Consumer Finance Co. is expected to further boost the bank’s market value and provide it with more capital to expand its operations.

The strategic sale of a 15% stake by VPBank to Sumitomo Mitsui’s unit, SMBC Consumer Finance Co., is expected to be a mutually beneficial deal for both parties. It will enable VPBank to leverage Sumitomo Mitsui’s expertise and expand its operations further, while Sumitomo Mitsui will be able to tap into Vietnam’s banking sector, which is growing rapidly.