Will HDBank raise its foreign ownership limit to 49 per cent according to EVFTA?

Bank mergers may become more common as a result of the EVFTA, with authorities modifying restrictions that have previously stifled acquisitions, such as raising the foreign ownership limit (FOL) on two local banks to 49 per cent (a stipulation of the agreement).

As to the identity of the two banks, the four state-owned banks (Vietcombank, VietinBank, Agribank and BIDV) will not be involved. According to Mirae Asset Securities, HDBank is among the two privately-held banks chosen to relax the FOL. If the adjustment is made, the bank’s stock could attract long-term investors.

Meanwhile, the probability of FOL relaxation could also bring a short term boost for the stock, bringing more firepower for the bank.

“Being one of the candidates whose FOL can be extended up to 49 per cent to comply with the EVTFA will be a significant catalyst for HDBank,” Mirae Asset Securities said.

“We raise our target price for HDBank to VND36,400 ($1.58), equivalent to a forward Price to Book (P/B) value of 2.5x. The forward P/B is in line with our new target trading multiples for the top-tier banks. Accordingly, we upgrade our rating to Buy (from Trading Buy),” the brokerage added.

Earlier in December, HDBank was reportedly partnering up with FWD Vietnam and Dai-ichi Life Vietnam to deliver insurance products through HDBank's countrywide distribution channels.