Vietnam Prosperity Joint Stock Commercial Bank (VPBank) on Monday announced that it has entered into an agreement with Japan’s Sumitomo Mitsui Banking Corporation (SMBC) - a subsidiary of Sumitomo Mitsui Financial Group, Inc. (SMFG) – to issue 15 percent of equity stake through a private placement, officially welcoming SMBC as a foreign strategic investor of the bank.

The investment from SMBC will help the bank raise VND35.9 trillion, or approximately US$1.5 billion, of Tier 1 capital, increasing its owner equity to around VND140 trillion from VND103.5 trillion.

This comes as part of the capital raising plan that VPBank has been implementing during 2022-23 in order to enhance its long-term financial strength and support the bank to reach ambitious growth strategy over the next five years.

Following the latest SMBC’s strategic investment, VPBank will become Vietnam’s second largest bank in terms of owner equity, which allows it to serve a wide range of customer needs in various segments, including retail banking, corporate banking and small and medium-sized enterprises (SMEs).

The robust capital stance will also back VPBank in serving large-scale enterprises, particularly the foreign direct investment (FDI) and multi-national companies that have been or will be investing in Vietnam. 

The new investment also proves a strong and trusted collaboration between SMBC and VPBank, since the two parties entered into a business partnership agreement in May 2022.

Previously, in 2021, SMBC Consumer Finance Co., Ltd – a subsidiary of SMFG – also acquired a 49 percent of equity stake in FE Credit, a wholly-owned subsidiary of VPBank.

SMBC, through this investment, will contribute towards VPBank’s growth by leveraging its know-how and business expertise accumulated in other Asian markets. SMBC is thus expected to help accelerate the digital transformation at VPBank, in order to deliver customer-centric banking products and services and superior customer experience.

Furthermore, thanks to the great reputation of a large financial institution like SMBC, the strategic deal is anticipated to attract and encourage potential FDI companies among the 200,000 corporate clients of SMBC to come and expand their investment in Vietnam.

These potential enterprises, once enter Vietnam successfully, will also likely become clients of VPBank.

For SMBC itself, through the rapport built with a local bank like VPBank, the group will be able to strengthen its foothold in the country and exploit opportunity to serve local investment projects, particularly those in the field of infrastructure construction and green and sustainable growth that the group has been paying attention to in recent years.

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