Raising the bank investment rate must ensure no conflicts of interest.

(Baonghean) - At the financial investment promotion conference in the United States that just ended on July 6, in the business discussion session, calling for foreign financial investment in the banking sector was of great interest to US investors. Nghe An Newspaper reporter had an interview with Mr. Pham Quang Tung - Deputy General Director of the Bank for Investment and Development of Vietnam (BIDV) and Chairman of the Board of Directors of BIDV Insurance Corporation, Chairman of the Board of Directors of BIDV MetLife Life Insurance Company Limited. We respectfully introduce to readers.

PVSir, can you share with Nghe An Newspaper readers about the results of BIDV's overseas business activities in recent times?

Mr. Pham Quang Tung:BIDV is a leading financial institution in Vietnam, established in 1957, operating in the fields of banking, insurance, securities and financial investment, with a wide business network in Vietnam and serving more than 7 million individual customers and more than 80,000 institutional customers. The BIDV brand is known by the domestic and international community and recognized as one of the leading brands in Vietnam. With more than 22,000 staff and financial consultants, BIDV provides comprehensive financial services to corporate and individual customers. Up to now, BIDV has deployed business activities in a number of countries in the region such as Laos, Cambodia, Myanmar, the Czech Republic; and participated in joint ventures with other foreign partners in Vietnam. Equitized since November 2011, BIDV's shares are currently listed on the Ho Chi Minh City Stock Exchange. Ho Chi Minh City Stock Exchange - HOSE since January 2014 with current charter capital of 31,481 billion VND (equivalent to 1.5 billion USD), state ownership ratio is currently 95.28%.

Transaction at BIDV Nghe An Branch. Photo: Quynh Lan

In the insurance sector, BIC is one of the leading non-life insurance companies in Vietnam with 25 member companies and 120 sales offices, exclusively distributing non-life insurance products through BIDV. By 2014, BIC had a total consolidated original insurance premium of VND 1,219 billion (equivalent to USD 60 million), with continuous growth and high 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 reinsurer headquartered in Canada. Accordingly, FairFax will buy 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 Life Insurance Company Limited with a charter capital of VND1,000 billion (equivalent to USD48 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 the parties to become a strong and reliable insurance product provider. Vietnamese customers will have the opportunity to access professional qualifications, high financial security, and advanced products and services according to international standards. In addition, the joint venture will leverage BIDV's deep understanding of the financial needs of Vietnamese customers, and its extensive network nationwide.

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:Coming to the United States this time to seek new investment opportunities with US financial partners, we would like to share the success of the insurance joint venture with partner MetLife, the reasons, the goals of the parties coming together in the joint venture, the role of the US partner. The establishment of the life insurance joint venture is aimed at forming a company operating in the life insurance sector, combining the operational experience and financial potential of the world-class life insurance group MetLife with BIDV's extensive branch and customer system in Vietnam.

In fact, the establishment of the joint venture is to provide a comprehensive banking - insurance product package to meet the increasingly diverse needs of customers, contributing to the diversity and increasing competitiveness of the Vietnamese life insurance market through accessing the market with advanced quality products and competitiveness compared to other products on the market. And the most important thing is that this is a channel to mobilize new capital sources for BIDV in particular and for the financial market in general, taking advantage of and promoting the strength of each joint venture partner. For BIDV, this is the strength of a diverse and potential customer base coming from a wide network of operations served by an abundant human resource with professional experience in implementing financial services. For MetLife, it is the strength of financial potential, management capacity and development of new and successful projects in the field of life insurance in countries in the Asian region.

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

PV:What is BIDV's next development plan after successfully "ringing the bell" in the United States, sir?

Mr. Pham Quang Tung:Not only after this conference, but also at the round table of the conference, we continue to call on foreign investors to invest in buying shares at BIDV. 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, in which the expected ratio for the financial investor is 10%, the strategic investor is 15-20% of BIDV's new charter capital. Through the sale of shares to foreign investors, BIDV will implement a roadmap to gradually reduce the ownership ratio of state shareholders at BIDV to 65% depending on the specific successful issuance rate of the transactions. The sale of shares to foreign investors is carried out by issuing additional shares: after the issuance, the total ownership of shares of foreign investors does not exceed 30% of BIDV's charter capital.

BIDV expects foreign strategic investors to support BIDV in terms of best practice governance models, product and service development, risk management, information technology and e-banking services, and human resource development strategies. In addition, BIDV's foreign investors must fully meet the criteria set by the State Bank for selecting strategic shareholders for equitized state-owned commercial banks. Specifically, strategic shareholders must satisfy the basic criteria of scale, with total assets of over 20 billion USD, experience (at least 5 years of experience), credit rating, long-term holding, commitment to technical support, and assurance of no conflict of interest.

PV:Thank you!

Red River

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