Banks divesting shares to clear cross-ownership status Many divestment deals have been made by commercial banks this month. Most of the businesses in which banks have withdrawn capital have made only modest profits and have had unsatisfactory business results.    According to the Hanoi Stock Exchange (HNX), three share auctions were organized by banks on November 20. Vietcombank sold 6.6 million shares, or 10.9 percent of charter capital of the Cement Finance Company (CFC), at the starting price of VND11,549 per share. The bank also put 13.25 million shares of SaigonBank, or 4.3 percent of charter capital, into auction on the same day at the starting price of VND12,550 per share. Meanwhile, OceanBank registered to sell 4 million shares, or 8 percent of circulating shares of PetroVietnam - SSG Real Estate JSC at the starting price of VND10,638 per share. Analysts noted that many commercial banks plan to divest shares. In mid-2016, SeABank registered to auction 416,300 shares, or 6.24 percent, of PV Oil Nam Dinh. Prior to that, a representative of Military Bank told the bank it would complete capital withdrawal from MBLand in 2017. The divestment is a move to pursue the State Bank’s Circular 36 which sets limits on capital contribution to ensure safe operation for banks. However, there is another important reason behind the divestment: capital contributions don’t bring satisfactory profits. The divestment is a move to pursue the State Bank’s Circular 36 which sets limits on capital contribution to ensure safe operation for banks.  PetroVietnam - SSG Real Estate, for example, has seen profit decreasing in the last two years. In 2016, its post-tax profit dropped by half from VND58 million in 2015 to VND30 million. The company doesn’t intend to pay dividends in 2017. The same situation can be seen at CFC. Its shareholders cannot receive dividends for many years. The company was established in 2008 with three founding shareholders, including Vietcombank. In 2016, CFC’s post-tax profit dropped dramatically by 88.98 percent compared with 2015. However, the profit increased again by 32 percent in the first half of 2017. Vietcombank’s capital contribution in Saigon Bank brings better profit as Saigon Bank’s profit in 2016 increased by 223.3 percent over 2015. However, Saigon Bank’s problem lies in bad debt with the non-performing loan ratio reaching 2.75 percent, near the ceiling level of 3 percent set by the central bank. SBV Governor Le Minh Hung, speaking about banks’ cross-ownership at the ongoing NA session, said SBV has been urging banks to divest shares to clear cross-ownership status. No more individuals hold more than 5 percent of charter capital of banks. The number of commercial banks which hold each other’s shares decreased from seven in 2012 to two.  The number of banks and businesses which hold each other’s shares has dropped from 56 to two. Mai Chi, VNN