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STB bank fights possible hostile take-over

Update: February, 24/2012 - 10:21

by Mai Huong

HA NOI — Sacombank (STB) and Eximbank (EIB), two of the five largest banks listed on the HCM City Stock Exchange, are currently involved in a fight to take control of STB's boardroom. The struggle has inflamed rumours that STB is facing a hostile takeover.

EIB, now a major STB shareholder, wrote to STB management on Monday demanding a new election for the boards of directors and control, arguing that current boards are leaving some major stakeholders underrepresented since changes have occurred in the bank's shareholding structure. Three strategic shareholders – ANZ Bank (which held a 9.78-per-cent stake in STB), Dragon Capital (6.66 per cent) and Refrigeration & Electrical Engineering Corporation (3.66 per cent) – have all recently withdrawn their investments.

EIB, now holding a stake of nearly 10 per cent (acquired from ANZ Bank), claimed that they have obtained authorisation from shareholders representing 51 per cent of STB's total shares with voting rights and therefore had authority to propose changes to the agenda of STB's upcoming shareholders meeting in April.

Among the changes, EIB has suggested that STB increase its profit target in 2012 by 15 per cent from the current target to over VND4 trillion (US$190.5 million). There were signs that STB management was dispersing the bank's assets, an EIB board member told the newspaper Tuoi Tre (Youth).

During preparations for its general shareholders meeting, STB is not allowed to transfer assets.

EIB's actions were therefore aimed at preventing possible damages to shareholders,the member said.

STB chairman Dang Van Thanh has denied the accusation, telling the newspaper Nguoi Lao Dong (Labourer) that it "has absolutely no basis".

"Currently, up to 80 per cent of STB assets are real property [including branches and transaction offices], so how could they be sold and to whom?" Thanh said.

He was skeptical about EIB's claim that it lawfully represented a majority of shareholders.

"Since STB has not finalised its list of shareholders, anyone holding STB shares can say they are our shareholders. But the conclusion of the shareholder list will be the deciding factor," Thanh said.

EIB currently holds 9.73 per cent of shares, while Southern Bank holds another 4.8 per cent, Thanh affirmed, but the remaining shareholders constituting the alleged 51 per cent of shareholders whom EIB claims to represent "have not been certified."

Late last week, however, STB suddenly canceled the date to conclude the shareholders list with the explanation that the agenda for the upcoming shareholders meeting needed to be amended.

Thanh refused to call a special election to replace the entire board of directors, saying "there's no reason to do this" and that it would be "unprecedented in Viet Nam and could cause huge disruptions to the market. As the representative of a group of major shareholders, EIB only has the right to propose to the shareholders meeting the election of additional members to the board."

EIB chairman Le Hung Dung disagreed, however, telling Nguoi Lao Dong that its claim had legal grounds and was made on the advice of lawyers.

Under STB's charter and related rules, shareholders holding at least 10 per cent of voting shares for at least six months have the right to nominate candidates for the board. Dung said that at least 17 per cent of the 51-per-cent of shares it claimed to represent had been held for over six months.

Tran Duy Canh, managing partner for the Luat Viet law firm, said Eximbank officially became an STB shareholder only in January, so its right to propose changes to the board or shareholders meeting agenda depended on the holding period of the remaining shareholders it represented.

The argument has become so noisy that the central bank late on Wednesday had to move to calm the market, confirming on its website that STB was in a healthy financial situation, operating stably and efficiently, and in compliance with all financial security ratios as stipulated by law. International rating agencies such as Moody's and S&P had also evaluated the bank as "stable".

The central bank said it was urgently looking into the sources of takeover rumours and would bring them to light and take appropriate measures.

STB's trades union also sent a letter to the Federation of Labour and Trades Unions of HCM City and the central bank on Wednesday, obtained by online newspaper VnEconomy, calling for an investigation into the actual owners of the alleged 51 per cent of shares and the purpose of their investments in STB.

"We welcome every positive contribution to the development of STB," the letter said. "However, the fact is that investments are accompanied by a media campaign about the ‘takeover' of STB aimed at reducing the confidence of shareholders and customers in the bank."

However, last week, STB management began to gather voting rights on behalf of other shareholders, moves seen as a defence against a threatened takeover.

Rumours continue to affect STB share prices. STB bottomed out for four consecutive sessions recently, recovering for two sessions before declining again. It closed off 1.6 per cent yesterday to VND18,700 ($0.90) per share. — VNS

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