Banking mergers get hotter

Eximbank, a major Vietnamese lender in which Japan’s Sumitomo Mitsui Financial Group holds 15 per cent, is planning to merge with another bank, but yet to disclose the identity of the prospective partner.

The Ho Chi Minh City-based bank’s annual general meeting late April approved a merger plan, assigning the board of directors to be responsible for carrying out the deal.

Eximbank chairman Le Hung Dung said such a merger would enable the lender to rapidly expand its network under the guidelines set forth by the State Bank of Vietnam.

Late this January, Eximbank and Sacombank signed a cooperation agreement saying they might merge in the next five years. Eximbank and Sacombank are the fourth and fifth largest non-State commercial banks in Vietnam in terms of assets with VND170 trillion ($8.17 billion) and VND152 trillion ($7.3 billion) as of mid-December 2012.

However at the annual general meeting, Dung did not say Eximbank would merge with Sacombank. Instead, he noted that Eximbank currently had a total of 217 branches and points of transaction nationwide, just in Vietnam, while Sacombank had over 400 in the country together with Laos and Cambodia branches. In addition, he disclosed that Sacombank reported VND850 billion ($40.8 million) in pre-tax profit in the first quarter of 2013, while Eximbank put the number at just VND470 billion until late April ($22.6 million).

“I supposed that we can set up five branches and points of transaction each year, we’ll need 40 years be equal to Sacombank’s current number,” Dung said.

Sacombank is now negotiating to sell a maximum of 20 per cent of its chartered capital to a foreign strategic shareholder, set to be completed this year. Its chairman Pham Huu Phu did not disclose any name of buyers.

Ho Chi Minh City Development Bank, or HDBank, also has M&A plans. The State Bank has given it the green light to merge with Dong Nai province-based Dai A Bank, said its chairwoman Le Thi Bang Tam. HDBank’s annual general meeting late April also approved a merger scheme.

Elsewhere, Military Bank is seeking a foreign strategic shareholder while local lenders are hoping to merge into the second largest non-State commercial bank in terms of assets. The minimum ownership for the strategic shareholder must be 5 per cent. So far, no prospective M&A deal seems appealing as no Vietnamese lenders meet Military Bank’s financial health requirements, which focus on non-performing loans and financial safety.

An Binh Bank, meanwhile, is calling for a higher foreign ownership limit, as the lender contends this would be preferable to an M&A plan. An Binh Bank chairman Vu Van Tien said at its annual general meeting late April that his bank wanted the limit to be raised to 49 per cent of its chartered capital instead of the current 30 per cent under Vietnamese laws. He added his bank currently saw no need for a merger.

At present, An Binh Bank has four major corporate shareholders, namely the World Bank’s International Finance Corporation (IFC), Malaysia’s Maybank, State utility Electricity of Vietnam, and Hanoi-based multi business group Geleximco.

Ho Chi Minh City-based Dong A Bank, meanwhile, acknowledged at its 2013 annual general meeting late April that it is also pondering M&A deals. Chairman Pham Van Bu said three or four local banks had made inquiries on a possible merger, and his bank was considering them.

Meanwhile, Western Bank and PetroVietnam Finance Cooperation have confirmed their merger plan with shares of the two firms valued equally. PVFC is now a credit institution specialising in wholesale while a strong point at Western Bank is retail.

According to their draft merger contract, the merged bank is expected to have a charter capital of VND9 trillion, ($432.7 million) or 900 million shares at par value at VND10,000 per share.