SMBC in Advanced Talks to Raise VPBank Stake to 20%, Sources Say

Japan’s Sumitomo Mitsui Banking Corp (SMBC) is in advanced discussions to increase its ownership stake in Vietnam Prosperity Joint Stock Commercial Bank (VPBank) to approximately 20%, four people familiar with the negotiations told Reuters. The potential deal would deepen the Japanese lender's strategic investment in one of Southeast Asia's fastest-growing economies.

Deal Structure and Valuation

SMBC, the core banking unit of Sumitomo Mitsui Financial Group, is looking to build on the 15% stake it acquired in VPBank in 2023 for $1.5 billion. According to two of the sources, the parties aim to finalize the new transaction this year but have not yet agreed on a valuation.

VPBank is reportedly seeking a significant premium to its current market price, similar to the 2023 transaction where SMBC paid roughly 40% above market value. One source indicated that SMBC has been hesitant to meet this premium and has internally explored the alternative of increasing its holding through open-market purchases instead of a private placement. At current prices, a 5% stake is valued at approximately $425 million. Both SMBC and VPBank declined to comment on the matter.

Strategic Rationale

An increased stake would grant SMBC greater access to Vietnam's burgeoning consumer and business banking sectors. One source stated that a key objective is to tap into Vietnamese customers for insurance and credit products, while also strengthening services for Japanese and multinational firms operating in the country's major manufacturing hubs.

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This move aligns with the broader interest in Vietnam's financial market, which was recently upgraded to emerging-market status by index provider FTSE Russell. The upgrade is expected to attract more foreign capital. Vietnam is targeting annual economic growth of at least 10% through 2030, driven by infrastructure investment and rising household wealth.

Regulatory and Market Context

Foreign ownership in Vietnamese banks is generally capped at 30% in total, with a single foreign investor and its affiliates typically limited to a 20% stake. However, VPBank operates under a special exception, with a higher foreign ownership limit of 49%, which it received after participating in the restructuring of a weaker domestic lender.

Other major foreign banks, including Japan’s Mizuho Financial Group and MUFG Bank, also hold significant minority stakes in Vietnamese financial institutions. In April, VPBank publicly stated it was in discussions for a private placement with unspecified foreign investors, and a May report from advisory firm Turicum Investment Management estimated the bank could raise between $700 million and $900 million from such a sale.