Eximbank, Sacombank marriage

The two banks, based in Ho Chi Minh City, have turned words into action by signing a cooperation agreement on January 29.

“The deal we signed tonight is effective for five years. It will make both of us stronger and this will help improve the conditions of the whole banking system of Vietnam,” Eximbank chairman Le Hung Dung said.

Eximbank and Sacombank would support each other in lending, interbank activities, payments and in other areas such as gold and foreign currency trading, he added.

Dung said Eximbank would contract an international consulting firm to make a pre-feasibility study first. Then, the two banks’ boards of directors would consider the findings. A second feasibility study would be made and regulatory and shareholder approval sought if the deal looked like a winner.

“That’s why we need a rather long time,” said Dung.

Eximbank which is 15.13 per cent owned by Japan’s Sumitomo Mitsui Financial Group, holds 9.73 per cent in Sacombank, and is authorised by its shareholders to represent a 51 per cent in the latter.  

Currently in Vietnam, the cap for all foreign holdings at a domestic bank is 30 per cent. A foreign strategic investor could own a maximum 20 per cent subject to government approval.

Eximbank and Sacombank are Vietnam’s second and fifth largest joint stock commercial banks in terms of assets, with VND160 trillion ($7.68 billion) and VND147 trillion ($7 billion) as of the end of 2012’s third quarter. Eximbank has nearly VND12.4 trillion ($594 million) in chartered capital while Sacombank’s chartered capital is VND10.7 trillion ($516 million).

Dung said that if the two lenders would make the merger in 2015, with Eximbank having a chartered capital of VND15.5 trillion and Sacombank’s VND13 trillion, the new bank would have almost VND30 trillion in chartered capital - almost $1.5 billion. The combination would also include 650 branches and transaction offices in Vietnam at that time, though there may be some consolidation.

Such new bank would also become the fifth largest Vietnamese financial institution in terms of assets after the four leading state-run banks – Agribank, BIDV, Vietinbank and Vietcombank.

Eximbank and Sacombank saw trading in their shares jump on the January 29 afternoon after news of their comprehensive cooperation plan leaked. The Ho Chi Minh Stock Exchange’s data showed that the volume of Eximbank shares traded hit 9.3 million, its highest in three months, and 1.08 million Sacombank shares changed hands, a month record.