Banks in firing line

Ficombank illustration photo

>> Banks get into the zone

>> Restructuring of banks is an urgent task for Vietnam

>> Banking sector seeks the right moves

>> Banking sector faces world of change

Ficombank, Tin Nghia Bank and Saigon Commercial Joint Stock Bank (SCB) all based in Ho Chi Minh City would be the first merger case on a voluntary basis, said State Bank governor Nguyen Van Binh.

Binh said these three banks’ recently faced liquidity woes since they had used short-term capital for medium and long-term loans. Therefore, they faced liquidity problems when their short-term capital sources became scarce.

“The situation got better with State Bank support. These three banks then sit together and came to a merger decision which they believe could help them save cost and institute a new stronger bank with expanded network and better market access,” said Binh.

The State Bank chief said BIDV would get involved into the new bank after merger in a comprehensive manner as a state capital representative to help ensure depositors’ rights.

“Depositor interests will be ensured. In the past months, central bank assisted these [three] banks to improve their liquidity,” Binh said.

In the coming period, relevant parties reportedly will reassess the operations of the three banks, their debts and assets and the State Bank will decide on state capital involvement ratio into the new bank after auditors’ assessment results are available, according to VnExpress.net.

Ficombank, Tin Nghia Bank and SCB report a total chartered capital of VND10.6 trillion ($504.7 million) and total asset value of VND154 trillion ($7.33 billion) by late September 2011.

According to Binh, the banking sector restructuring plan in principle got the thumbs-up from the government and would soon be submitted to the Politburo for consideration. In  the first phase from now until the end of 2012’s first quarter banks will be classified based on their actual ‘health’ to seek suitable remedies.