The move of transferring assets and capital flow at PetroVietnam (PVF) has made investors think that the giant finance company is preparing for the plan to shift to operate as a commercial bank.
The PetroVietnam Finance's head office
Four years ago, the US Morgan Stanley purchased 10 percent of stakes of PetroVietnam Finance at nearly 70,000 dong per share. One of the conditions the US group set was that PVF has the right to hold the sum of money for three years for making investments.
Another well-known international finance group in the world, a Japanese one which has invested in the banking sector in Vietnam, is following final steps to terminate the deal of purchasing 10 percent of PVF’s stakes.
Once the deal is completed, PVF will have to foreign strategic shareholders. However, PVF’s process of seeking foreign capital sources has not finished yet, because under the plan, the state’s capital proportion at PVF will reduce to 20 percent.
PVF successfully collected 1 trillion dong worth of debts from Vinashin
When some subsidiaries of Vinashin, the shipbuilding group which has been bogged down in debts and needs restructuring, were moved from Vinashin and put under the management of PetroVietnam, the national oil and gas group, last year, PVF proved to be the one who most “fluttered”. By the end of 2009, Vinashin had owed trillions of dong to PVF.
However, PVF, in its fourth quarter’s finance report, unexpected announced that it had successfully collected 800 billion dong worth of principals and loan interests from Vinashin. At that time, the announcement did not catch much attention, because this was just a quarterly finance report which was not examined.
Later, in the 2010 annual report, one could read the information that by December 31, 2010, the total outstanding loans provided by PVF to Vinashin had dropped to 1299 billion dong. And the report for the first half of 2011 showed that by June 30, 2011, the total sum of money VInashin had owed to PVF dropped to 1129 billion dong. This means that PVF has successfully collected 170 billion dong more in debts from Vinashin.
This also means that just within one year, PVF could collect 970 billion dong in debts, the thing that not many domestic creditors can do.
Nguyen Dinh Lam, Chair of PVF has confirmed the figure, adding that PVF plans to collect all the debts by the end of the year.
How Vinashin’s debts will be settled and how the fates of Vinashin’s creditors will be remains a secret. Sources said that as for the loans with collaterals, creditors may get 25 percent of total loans’ values in government bonds. Besides, it is likely that the State would apply a support mechanism to be applied to 30 percent of the total debts for 1-3 years. The support mechanism means the policies which allow creditors to trade the mortgaged assets and deal with the risks.
The foreign investors who plan to buy PVF shares may well understand the issue and this could be one of the reasons that prompt them to become the strategic shareholders of PVF.
PVF to become a commercial bank?
The most noteworthy move made by PVF is the asset transfer, i.e it has put the capital immovably lying in assets, such as shares or bonds which can decrease in values in accordance with the market fluctuations, to the capital which can be used for short term lending for profit.
PVF still holds the model of an investment bank, but it does not make investment itself, but it provides investment services, such as acting as guarantor for bond issues, arranging capital and giving consultancy service in merger and acquisition deals.
Regarding the investment, for the last two years PVF has not purchased more shares, while it has been trying to withdraw capital from some projects at reasonable moments. PVF has reportedly sold the assets worth 3600 billion dong so far this year.
The PVF”s finance report for the first six months of 2011 shows the trend of PVF of strengthening the capital mobilization, especially from other subsidiaries of PetroVietnam, and from outside. The deposits have increased from 1739 billion dong to 7037 billion dong.
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