Vietinbank has denied a rumour that it has lost billions of dong on leased land in Ha Noi’s Ciputra new urban area and said it remains determined to build an office tower on the land.
The plan for construction of a new headquarters for Vietinbank received the nod from the State Bank of Viet Nam and Vietinbank’s executive board back in 2007-08 to enter a joint venture with a foreign investor to develop the project.
Vietinbank then signed a contract with Ciputra developer Citra Westlake Development Co., Ltd (Ciputra) to lease a 30,000sq.m building site in the Ciputra area at US$1,800/sq.m, totalling $53 million over a 40-year period. They also entered into an agreement with a foreign partner from Singapore.
Two years later, however, no work has been done on the project and many began wondering if the bank were simply losing money on the leased land.
Yesterday, Vietinbank Deputy Ggeneral Director Nguyen Van Du told reporters at a press briefing in Ha Noi, "We definitely have not suffered losses from the leased property. We have not abandoned the site."
He said the delays in commencing the project were due to Citra’s failure to settle all outstanding ground clearance issues. The Singapore partner had also pulled out of the project due to the global economic crisis, Du said.
Citra Deputy Director Pham Hong Khang also confirmed that Citra had not yet conveyed the land to Vietinbank due to negotiations with some families remaining on about 688sq.m of the site in Tu Liem District. Vietinbank’s chief accountant Nguyen Van Trung revealed, "Since Citra has not conveyed the land, Vietinbank has paid only VND102 billion [$5.5 million]. The remaining VND750 billion [$40.5 million] has been held in escrow at Vietinbank’s Ha Noi branch."
Trung said that a loss to Vietinbank was impossible. Under the contract with Citra, Vietinbank could sublease the land at a profit or Citra would have to compensate Vietinbank if it failed to deliver the property.
Land in the Ciputra area was now estimated to be worth about $4,000 per sq.m, making the area in question have an open market value of about VND2.22 trillion ($120 million).
"Citra is ready to pay back money to Vietinbank with interest in order to hold onto the land," said Du. "However, Vietinbank is determined to use the land for construction of its headquarters building and to replace the current small head office [located on Tran Hung Dao Street]."
Ground clearance was expected to finalise within the first half of this year, and Vietinbank has inked a contract with London-based architects Forster & Partners to design the planned building.
The bank expected to break ground on the project late this year or early next year.
Many stock market insiders, meanwhile, said that rumours about the project had had a negative impact on Vietinbank shares in recent days. Coded CTG on the HCM City Stock Exchange, the shares closed up yesterday by 0.3 per cent to VND29,600.