(The following press release from Moody's was received by e-mail. It was 
confirmed by the sender.) 
VietinBank Sells 20% Stake to Tokyo-Mitsubishi Bank, a Credit Positive
Falemri Rumondang, Associate Analyst, Moody’s Investors Service Singapore Pte. 
From "Moody's Credit Outlook", January 10, 2013 
On 28 December, Vietnam’s regulators approved the sale of about a 20% stake in 
Vietnam Bank for Industry and Trade (VietinBank, B3 stable; E/caa1 stable)1 to 
Bank of Tokyo-Mitsubishi UFJ. Ltd. (BTMU, Aa3 stable; C/a3 stable), which had 
announced the transaction the day before.  
As part of the deal, VietinBank, the country’s second-largest state-owned bank 
by asset size, will issue new shares to BTMU for VND15.5 trillion (about $743 
million). The transaction is credit positive for VietinBank because it will 
provide a significant and timely boost to its loss-absorbing buffer, including 
its Tier 1 capital. 
We estimate that VietinBank’s loan-loss reserve coverage ratio was low at 43% 
in mid-2012, after taking into account both reported non-performing loans 
(NPLs) and special mention loans. The $743 million capital injection gives 
VietinBank more leeway to address this under-reserving without eroding its 
capital position, especially in view of Vietnam’s challenging operating 
environment. We estimate that VietinBank’s Tier 1 capital ratio will increase 
to about 17% from 11.15% at the end of June 2012 as a result of the capital 
The sharp slowdown in loan growth in 2012 weakened VietinBank’s capacity to 
increase its capital through earnings retention. Its loan growth was a mere 
2.6% for the first nine months of 2012, down from 30% over the previous five 
years. Consequently, net interest income dropped 6.7% between January and 
Notwithstanding the immediate relief provided by this capital injection, we 
expect VietinBank -- like other Vietnamese banks2 -- to remain pressured by 
poor profitability, asset quality and transparency. 
VietinBank will challenge BTMU to bring about positive fundamental changes in 
both its financial performance and governance practices, issues that have 
plagued Vietnam’s banks. Moreover, BTMU’s 20% stake, after the completion of 
the acquisition, will remain far below the 64% held by the government of 
Vietnam (B2 stable), which will continue to exert considerable influence3. 
Given that VietinBank will remain a policy-driven bank, with its clientele 
consisting mainly of state-owned enterprises, the challenges for BTMU will be 
More generally, foreign strategic partners in Vietnam’s banks have had very 
little success in making sweeping changes. For example, Asia Commercial Bank 
(B3 stable; E/caa1 stable) has received technical assistance from its foreign 
shareholder, Standard Chartered PLC (A2 stable)4 since 2005, but corporate 
governance issues resulted in the arrest of its senior executives in 2012 5. 
1.      The ratings shown are the banks’ deposit rating, its standalone bank 
financial strength rating/baseline credit assessment and the corresponding 
rating outlooks.
2.      See our 8 October 2012 analysis of the challenges facing the Vietnamese 
banks in our report Key Drivers of Vietnamese Bank Rating Actions.
3.      The Vietnamese government indirectly owns VietinBank through the stake 
held by the State Bank of Vietnam, the country’s central bank. BTMU’s 
acquisition reduces the government’s stake to about 64% from 80%, and the 
International Finance Corporation’s (Aaa stable) stake to about 8% from 10%.
4.      Standard Chartered’s 15% stake in Asia Commercial Bank is held via its 
Hong Kong- and UK-based subsidiaries.
5.      See Moody’s Comments on ACB and the Arrest of its Co-Founder, 23 August 
Published every Monday and Thursday morning, Moody's Credit Outlook informs our 
research clients of the credit implications of current events. They are 
available to all registered users of
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