TOKYO -- Japan's Aozora Bank will take a 15% stake in a Vietnamese bank as early as April, marking its first overseas deal since changing to its current incarnation in 2001.
Aozora will buy into Orient Commercial Joint Stock Bank through acquisition of existing stock and a third-party allocation of new shares, becoming the Vietnamese lender's top shareholder. The deal is expected to be worth about 15 billion yen ($139 million).
Aozora is among a number of Japanese banks turning to Southeast Asia in search of growth amid a shrinking population and ultralow interest rates at home.
Ho Chi Minh City-based Orient Commercial provides retail banking services and lending to small and midsize enterprises, with around 130 branches across Vietnam. Even as a second-tier bank, it boasts some of the fastest growth in the industry, thanks to development in rural areas fueling a growing need for capital among construction and real estate companies.
The lender's after-tax profit more than doubled in 2018 to 1.76 trillion dong ($76 million at current rates).
Aozora plans to help Orient Commercial with risk management and compliance systems based on international standards. And they will work together on digital banking and investment banking services, as well as on providing support to Japanese companies seeking to expand into Vietnam.
The deal will be concluded once it is approved by local authorities. Aozora plans to send two directors to Orient Commercial's board and make the lender an equity-method affiliate.
The Japanese bank, called Nippon Credit Bank at the time, went under in 1998 and was temporarily nationalized. After being bought by domestic financial institutions in 2000, it changed its name to Aozora Bank the following year.