South Korea’s Hana Bank has agreed to buy a 15% stake in the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) for 1 trillion won ($850 million), its parent Hana Financial Group said on Monday.
BIDV, Vietnam’s second-largest listed bank with a market capitalization of $5.26 billion, said it will issue 603.3 million new shares for the stake sale. It pegged the deal value at 20.295 trillion dong ($874 million).
The stake sale is the latest large investment by a South Korean firm in the Southeast Asian country, after conglomerate SK Group in May agreed to buy a 6.1% of Vietnam’s largest firm, Vingroup JSC, for $1 billion.
Vietnam caps foreign ownership in local banks at 30%, but has allowed some overseas banks to open wholly-owned units.
Hana Financial said in a regulatory filing the purchase of the BIDV stake will facilitate its entry into the Vietnamese market and secure sources for its mid- to long-term growth.
Vietnamese banks need as much as $20 billion in the run-up to the adoption of Basel II standards, scheduled for Jan. 1, 2020, Fitch Ratings said in a note last week.
Vietnam’s Military Commercial Joint Stock Bank MBB.HM said last week it was seeking to sell a 7.5% stake to one or more foreign investors this year.
South Korea is the largest source of foreign direct investment in Vietnam, which has over recent years become a production base for several companies such as Samsung Electronics and LG Electronics Inc.