HANOI UNIVERSITY

FACULTY OF MANAGEMENT AND TOURISM

--------oOo--------

Financial & Monetary Theories

Report about: CFO of a joint stock commercial bank in Vietnam.

Tutor: Dao Mai Huong Group 1 Tut 3

Pham Phuong Nhung 2204040075

Nguyen Duy Nam 2204040066

Tran Thu Thao 2204040088

Nguyen Thu Mai 2204040062

Do Thi Ngoc Anh 2004040018

Nguyen Thi Tam 2206190038

 TABLE OF CONTENTS
Abstract.................................................................................................................... 3
1. Introduction........................................................................................................... 4
2. Development of Vietnam Stock Market........................................................................4
2.1. General overview of Vietnam Stock Market................................................................4
2.2 Vietnam’s stock market trend in 2024.........................................................................4
2.3 Comparison with other countries...............................................................................5
3. IPO Process & requirement....................................................................................... 6
4. Opportunities & Challenges for IPOs..........................................................................7
4.1. Opportunities........................................................................................................ 7
4.2. Challenges............................................................................................................ 7
5. Conclusion............................................................................................................. 8
REFERENCES.............................................................................................................. 9
 Abstract
The role of the Chief Financial Officer (CFO) in a joint stock commercial bank in Vietnam is
critical for ensuring financial stability, regulatory compliance, and long-term growth. This
position involves managing the bank’s financial operations, including budgeting, forecasting,
risk management, and capital allocation. A significant aspect of the CFO’s responsibilities is the
exploration of opportunities to raise capital, including through Initial Public Offerings (IPO) on
the Vietnamese stock market. By navigating the complex legal and regulatory environment, the
CFO plays a vital role in shaping the bank’s strategic direction and ensuring financial health in
a highly competitive market.

1. Introduction
The Chief Financial Officer (CFO) of a joint stock commercial bank in Vietnam holds a
pivotal role in driving the bank's financial strategy and ensuring its operational success in
a dynamic and highly regulated market. As the financial leader, the CFO oversees critical
 functions such as financial planning, risk management, capital allocation, and compliance
with banking regulations. In addition to managing day-to-day financial operations, the
CFO is tasked with identifying growth opportunities, including the potential to raise
capital through Initial Public Offerings (IPO). This role requires deep financial expertise,
strategic vision, and an understanding of Vietnam's evolving financial landscape to
sustain the bank’s long-term profitability and growth.

2. Development of Vietnam Stock Market

2.1. General overview of Vietnam Stock Market
The Vietnamese stock market has shown remarkable growth and resilience, with 2023
being a standout year in comparison to other regional and global markets. By year-end,
the VN-Index stabilized around the 1,100-point mark, reflecting a steady recovery
supported by Vietnam’s flexible monetary policies. Lower interest rates helped reduce
capital costs, boost business recovery, and maintain market liquidity. Vietnam’s total
market capitalization surpassed $240 billion, equating to 56.4% of GDP, with the Ho Chi
Minh Stock Exchange (HoSE) accounting for $186 billion. August 2023 saw record
trading volumes, reaching 24.1 billion units.
Retail investor participation surged, and many companies achieved substantial market
capitalizations. With ongoing infrastructure improvements and government initiatives, the
market is well-positioned for continued growth. These factors, along with dynamic
liquidity and trading volumes, suggest a promising future for Vietnam as a key player in
the regional financial landscape.

2.2 Vietnam’s stock market trend in 2024

In 2024, Vietnam's stock market is expected to maintain its growth momentum, driven by
strong GDP growth, low interest rates, and increasing foreign direct investment (FDI),
particularly in technology and manufacturing. Management reforms and improved
business transparency are further enhancing investor confidence. Despite potential
challenges from global economic and political fluctuations, analysts forecast a new five-
year growth cycle similar to the 2013-2018 period.
The first quarter of 2024 saw strong market performance, led by sectors such as banking,
industrial real estate, retail, and information technology. Government initiatives from the
Ministry of Finance, State Securities Commission, and Vietnam Stock Exchange are
aimed at promoting sustainable market development.
By August 2024, Vietnam's market capitalization rose to $217.65 billion, reflecting
steady growth and continued recovery, positioning the market for further expansion
throughout the year.
In 2024, the liquidity of Vietnam's stock market experienced notable fluctuations. In low
liquidity periods, such as July 2024, liquidity dropped to record lows, with the southern
bourse seeing only VND 11.4 trillion ($453 million) per session. However, by the end of
the first quarter, liquidity significantly improved, with investor deposit balances at
securities firms rising to nearly VND 100.8 trillion, marking the strongest quarterly
growth in five years. The average transaction value per session also surged to VND 24.6
trillion, an 80% increase from earlier in the year, reflecting the market’s dynamic nature.
2.3 Comparison with other countries
The stock markets of Thailand, the USA, and Vietnam play crucial roles in the global
financial landscape, offering investment opportunities and fostering economic growth.
Each market operates under strong regulatory frameworks that aim to ensure integrity,
transparency, and investor protection. In the USA, the Securities and Exchange.
Commission (SEC) enforces laws like the Sarbanes-Oxley and Dodd-Frank Acts, which
set strict standards for corporate disclosures and investor safety. Vietnam’s State
Securities Commission (SSC) implements reforms to enhance transparency and listing
procedures, while Thailand’s Securities and Exchange Commission continuously updates
its regulations to meet international standards. Despite varying degrees of market
maturity, each country’s regulatory body is committed to safeguarding its financial
ecosystem.
The variety of financial instruments across the three markets enables investors to manage
risks and diversify their portfolios effectively. The USA, with over 7,000 listed
companies, offers a wide range of securities, including stocks, bonds, ETFs, and
derivatives. Vietnam’s Hanoi Stock Exchange (HNX) and Ho Chi Minh City Stock
Exchange (HOSE) list over 600 companies, while Thailand’s Stock Exchange (SET) has
around 700. While Vietnam and Thailand are expanding their offerings to attract more
investors, the USA remains the global leader in both the quantity and variety of financial
products.
 Technological integration has significantly improved trading efficiency in the USA,
Vietnam, and Thailand. The USA leads with advanced financial technology like high-
frequency trading, while Vietnam rapidly adopts fintech solutions, and Thailand invests
in digital infrastructure and cybersecurity. All three markets are globally integrated, with
the USA attracting substantial international investments, Vietnam benefiting from FDI
through liberalization policies, and Thailand serving as a financial hub in Southeast Asia.
However, these markets differ in size and liquidity. As of August 2024, Vietnam’s stock
market was valued at $217.65 billion, while the USA’s was the largest at $46.7 trillion in
2023. Thailand's daily transaction value stands at $2.37 billion. These disparities provide
key insights for investors and policymakers.
3. IPO Process & requirement

Step 1: Select an Investment Bank

For your initial public offering (IPO), cultivate connections with investment banks,
conduct interviews with them, and select a lead underwriter. When picking an investment
bank for the IPO, evaluate their sector knowledge, reputation, past IPO success, the
quality of their investment research, and their ability to interact with other underwriters to
attract possible investors.

Investment bankers vying to be your company's lead underwriter will submit a pitch book
to your management team through a competitive procedure. This pitch book contains the
suggested IPO share price as well as an assessment of the deal, associated risks, and
suggested valuation. This aids in directing the business's choice of the best underwriter
for a fruitful IPO.

Step 2: Evaluation

Pre-IPO due diligence includes assessing the company's reputation, internal controls,
accounting practices, financial and audit outcomes, revenue growth, and viability of the
business model, among other things. Additionally, it comprises examining regulatory
compliance, legal standing, management competence, and the qualifications of the
management team and board of directors, assuring their independence.

Step 3: Pricing and IPO Filings

Companies release a red herring, or preliminary prospectus, ahead of the initial public
offering (IPO), which leaves out the final IPO price, the number of shares, and the money
to be raised. The SEC reviews this prospectus (S-1 registration), which includes financial
statements and company information. After changes and SEC approval, the S-1 becomes
effective, allowing the corporation to set a final share price and issue shares.

In a conventional initial public offering (IPO), institutional investors' feedback obtained

via a roadshow is used to set the share price. Investment banker valuations derived from
predicted financials and market comparables are further criteria. The final price is
decided the night before the IPO.
 An alternative is to employ a Dutch Auction, in which buyers and sellers place bids on
shares and agree on a minimum price. In its infamous 2004 IPO, Google employed this
strategy.

Step 4: Going Public

A company goes public when its registration statement becomes effective, its shares are
priced, and trading begins on a stock exchange such as Nasdaq or NYSE.
In addition to traditional IPOs, other methods to go public include merging with a public
shell company, using a company shell, or through a special purpose acquisition company
(SPAC). Another option is a direct listing, where existing private shares are sold directly
to the public without an underwriter.

Step 5: Stabilization
Shares trade on a stock exchange once the IPO is live. Investment banking companies
that make up the underwriting syndicate sell a limited quantity of extra shares at the IPO
offer price.

Underwriters have the opportunity to execute the greenshoe option, also known as the
over allotment option agreement, which allows them to sell up to 15% more of the
planned IPO shares and then repurchase the extra shares that were issued in order to
stabilize the market.

Step 6: Transition to Market Trading - Completing the IPO

At the conclusion of the IPO, the priced shares begin trading on public capital markets
based on public investor demand, particularly from those who did not receive IPO share
allocations. A well-received company's stock price may increase by 20% on its first day
of trading on the stock exchange.
After the sale, the company's shares are traded publicly alongside other companies listed
on the stock market.

4. Opportunities & Challenges for IPOs

4.1. Opportunities
An IPO offers significant benefits for our joint stock commercial bank in Vietnam. It
enhances access to capital for expansion, strengthens our capital base, and supports
regulatory compliance. A listed status boosts the bank's reputation, attracting high-profile
clients and investors, while improving governance through increased transparency.
Additionally, an IPO provides liquidity for shareholders, aids future capital raising and
M&A activities, and positions the bank favorably in Vietnam's evolving regulatory
landscape, aligning with government initiatives to develop the banking sector.

4.2. Challenges
 While an IPO offers opportunities, it also presents challenges for our bank. Increased
regulatory scrutiny, stringent disclosure requirements, and greater transparency may
strain resources. Market volatility, especially with bank stocks sensitive to economic
cycles, could lead to unpredictable valuations. Additionally, there may be pressure to
prioritize short-term results over long-term goals. In Vietnam's crowded banking sector,
competition for investor attention will be tough, making differentiation difficult. These
challenges must be carefully addressed in our IPO strategy.

5. Conclusion
As the CFO of a joint stock commercial bank in Vietnam, the role involves strategic
financial management, ensuring regulatory compliance, and driving sustainable growth. A
key focus is on capital raising initiatives, including exploring IPO opportunities to
expand the bank’s capital base and market reach. Navigating Vietnam's dynamic financial
landscape requires balancing risk management with innovation, positioning the bank to
thrive in a competitive market while contributing to the country’s economic development.
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