SBV looks set to resolve weak banks in 2015

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>> Vietcombank to merge with Saigonbank

Big names in the local banking sector including Vietcombank, BIDV and Vietinbank are said to be merging with smaller and weaker banks in the first half of the year.

According to SBV, in 2015, SBV will speed up the process of bank restructure. SBV has set target to resolutely deal with weak banks with no prospects for recovery and further development. SBV may announce dissolution, bankruptcy or entail compulsory intervention to resolve cross-ownership and to form large-scale, stronger and more competitive commercial banks.

SBV revealed that there will be at least six to seven bank M&As in 2015 alone. The authority is also firm on the banking restructuring by stressing that it will not exclude circumstances where it has to impose extreme measures such as compulsory purchases of shares and designated M&Á for some banks.

During the Vietcombank conference on Business Implementation 2015, SBV Governor Nguyen Van Binh emphasised that the process of restructuring has gone through the first phase in handling weakest banks across the banking system. In the second phase, SBV will focus on stronger banks and direct these banks to take on smaller banks.

The first merger to be expected the most is the case of Vietcombank and Saigonbank. As a largest bank in Vietnam, Vietcombank shows high safety indicators, while Saigonbank, even though small in size, yet is considered as a transparent bank. Vietcombank currently holds a large number of shares in Saigonbank and both banks are seen to have close relationship with one another.

Meanwhile, BIDV is expected to merge with another bank, possibly MHB, while Vietinbank is said to pair up with a smaller bank, perhaps one of PGBank, Ocean Bank or GPBank.

Other bank M&As could include Maritime Bank merging with Mekong Bank and SouthernBank to join Sacombank.

SBV aims at reducing the total number of banks to around 20 commercial banks to 2017. As such, there will be more than 10 bank M&As expected to happen in the coming time. M&As in the banking system will prepare a common ground for competitions and growth in the economy, according to the National Financial Supervisory Commission chairman Vu Viet Ngoan.

“In principle, financial institutions must ensure the mutual benefit of the whole economy in each country they are in. In other countries, weak institutions are often required to go bankrupt. As for us, merger is a fundamental change to overcome the weaknesses in the banking sector”, said Ngoan.