Duo look for mega merger

According to Sacombank’s new chairman Pham Huu Phu,  Sacombank  was interested in merging with Eximbank. “That’s our idea, but we need to do research and outline a suitable road map.This will suit the State Bank’s scheme to restructure the banking system by reducing bank numbers and increase the financial health of the banking system,” Phu told VIR.

“Then the banking system will have one new bank with comparative advantages to compete with other banks in the region,” he said.

Eximbank is a major shareholder of Sacombank, holding a 9.73 per cent stake.

Sacombank has chartered capital of VND10,739 billion ($500 million), while Eximbank’s figure is VND12,355 billion ($590 million). If the two banks are merged, the new entity’s chartered capital would be more than $1 billion, which is as large as   state-owned banks’ like Vietcombank, Agribank, BIDV and Vietinbank.

BIDV Securities Company’s economic analysis manager Tong Minh Tuan  said the merger was a good idea as the new bank would inherit the reputations of two well-known institutions.

“Especially in the restructuring process, the classification of weak and healthy banks is very clear. The State Bank is very strict on removing weak banks and encourages mergers and acquisitions,” said Tuan.

A key issue, Tuan said, would be whether the merger would be a friendly consolidation or a hostile takeover. “If the latter, then there will be complications in the power transition process.”

Marc Djandji, senior vice president at Indochina Capital, said that Vietnam would have a large bank to compete with other banks in the region. However, Djandji said that the new bank should solve internal problems before embarking on regional expansion.

“I would be worried if they came out after the merger with some sort of regional expansion programme, because there is still too much to do locally, especially the troublesome non-performing loans (NPLs),” he said.

Based on Sacombank’s consolidated financial statement for the third quarter of this year, the bank’s NPL ratio is 1.42 per cent, or VND1,234 billion ($59.2 million). Eximbank has not announced its third quarter financial statement but in the second quarter, Eximbank’s NPL ratio is 1.73 per cent, or VND1,304 billion ($62.6 million).

At the end of last month, the State Bank’s Ho Chi Minh City branch informed that the central bank had approved in principle the merger between Dai A Bank and HDBank.

Like Sacombank and Eximbank,  DaiABank and HDBank are working well compared with its peers and are not included in the State Bank’s list of nine weak banks that were required to carry out restructuring. To Duy Lam, the State Bank’s Ho Chi Minh City branch director, said the merger between DaiA Bank and HD Bank was normal.

Based on the State Bank’s banking restructuring plan for 2011-2015, about two Vietnamese commercial banks would  become big regional players by 2015.