Increasing the proportion of bank investments must ensure there are no conflicts of interest.

(Baonghean) - At the financial investment promotion conference in the United States, which concluded on July 6th, during the business discussion session, the call for foreign financial investment in the banking sector attracted significant interest from US investors. A reporter from Baonghean Newspaper interviewed Mr. Pham Quang Tung, Deputy General Director of the Vietnam Investment and Development Bank (BIDV), Chairman of the Board of Directors of BIDV Insurance Corporation, and Chairman of the Board of Members of BIDV MetLife Life Insurance Company Limited. We respectfully present this interview to our readers.

PVSir, could you share with the readers of Nghe An Newspaper the results of BIDV's overseas business operations in the past period?

Mr. Pham Quang Tung:BIDV is a leading financial institution in Vietnam, established in 1957. It operates in the fields of banking, insurance, securities, and financial investment, with a wide network throughout Vietnam, serving over 7 million individual customers and more than 80,000 institutional customers. The BIDV brand is recognized both domestically and internationally as one of Vietnam's leading brands. With over 22,000 employees and financial advisors, BIDV provides comprehensive financial services to both corporate and individual clients. To date, BIDV has expanded its business operations to several countries in the region, including Laos, Cambodia, Myanmar, and the Czech Republic; and participates in joint ventures with other foreign partners in Vietnam. Having been equitized since November 2011, BIDV shares are currently listed on the Ho Chi Minh City Stock Exchange. Ho Chi Minh City Stock Exchange (HOSE) has been listed on the Ho Chi Minh Stock Exchange since January 2014 with a current charter capital of VND 31,481 billion (equivalent to USD 1.5 billion), and the state ownership ratio is currently 95.28%.

Transactions at BIDV Nghe An Branch. Photo: Quynh Lan

In the insurance sector, BIC is one of Vietnam's leading non-life insurance companies with 25 member companies and 120 sales offices, exclusively distributing non-life insurance products through BIDV. By 2014, BIC had consolidated gross premium income of VND 1,219 billion (equivalent to USD 60 million), consistently demonstrating high growth and profitability. BIC is rated B+ by AMBest and has been listed on the Ho Chi Minh Stock Exchange since 2011. On May 4, 2015, BIC signed a share purchase agreement with FairFax Asia Limited, a wholly owned subsidiary of Fairfax Financial Holdings, a global insurer and reinsurance company headquartered in Canada. Accordingly, FairFax will purchase 35% of BIC's newly issued shares, equivalent to 41,046,913 shares, and become BIC's foreign strategic investor.

In addition, BIDV also owns BIDV MetLife Insurance Company Limited with a charter capital of VND 1,000 billion (equivalent to USD 48 million), of which MetLife owns 60%, and the remaining 40% is held by BIDV and BIC (35% and 5% respectively). The BIDV MetLife joint venture will focus on life insurance and health insurance products. The BIDV MetLife joint venture will leverage the strengths of all parties to become a robust and reliable insurance product provider. Vietnamese customers will have access to high levels of expertise, financial security, and advanced products and services according to international standards. Furthermore, the joint venture will leverage BIDV's deep understanding of the financial needs of Vietnamese customers and its extensive nationwide network.

PV:With those advantages, what investment opportunities does BIDV bring to this International Financial Investment Promotion Conference in the United States, sir?

Mr. Pham Quang Tung:This trip to the United States is to seek new investment opportunities with US financial partners. We would like to share the success of our joint venture in insurance with MetLife, the reasons and objectives behind the partnership, and the role of our US partner. The establishment of this life insurance joint venture aims to create a company operating in the life insurance sector, combining the operational experience and financial strength of the internationally renowned life insurance group MetLife with BIDV's extensive branch and customer base throughout Vietnam.

In reality, the joint venture aims to provide comprehensive banking and insurance products that meet the increasingly diverse needs of customers, contributing to the diversity and increased competitiveness of the Vietnamese life insurance market by accessing the market with advanced, high-quality products that are competitive with other products on the market. Most importantly, this is a channel for mobilizing new capital for BIDV in particular and the financial market in general, leveraging and maximizing the strengths of each joint venture partner. For BIDV, this strength lies in its diverse and potential customer base, stemming from its extensive network served by a large workforce with expertise and experience in implementing financial services. For MetLife, it is the strength of its financial resources, management capabilities, and successful track record in developing new projects in the life insurance sector in Asian countries.

It should be noted that we are well aware that the factors leading to successful cooperation and the formation of a joint venture must include the needs and development strategies of both parties, the spirit of cooperation during the research and negotiation process, and the support of regulatory agencies.

PV:What are BIDV's next development plans after successfully expanding its presence in the United States, sir?

Mr. Pham Quang Tung:Not only after this conference, but also at the conference's roundtable, we continued to call on foreign investors to invest in BIDV shares. After officially listing on the stock market in January 2014, with the aim of further strengthening financial capacity, improving corporate governance, developing banking services, and enhancing risk management, BIDV has developed a plan to seek and issue shares to foreign investors.

Specifically, we need a strategic investor and a financial investor, with the expected stake for the financial investor being 10%, and the strategic investor 15-20% of BIDV's new charter capital. Through the sale of shares to foreign investors, BIDV will gradually reduce the state shareholder's ownership stake in BIDV to 65%, depending on the specific success rate of the issuance transactions. The sale of shares to foreign investors will be carried out through a share issuance: after the issuance, the total shareholding of foreign investors will not exceed 30% of BIDV's charter capital.

BIDV desires foreign strategic investors to support BIDV in best practice governance models, product and service development, risk management, information technology and e-banking services, and human resource development strategies. Furthermore, BIDV's foreign investors must fully meet the criteria stipulated by the State Bank of Vietnam for selecting strategic shareholders of privatized state-owned commercial banks. Specifically, strategic shareholders must satisfy basic criteria regarding scale (total assets exceeding US$20 billion), experience (at least 5 years of experience), credit rating, long-term holding, commitment to technical support, and ensuring no conflicts of interest.

PV:Thank you, sir!

Red River

(Perform)