Habubank announces plan to merge with SHB

The draft merger plan will be added to the meeting agenda to seek shareholders’ opinions, a move made as part of the merger process of the two banks, before seeking approval from SHB’s shareholder meeting on May 5, and later, the State Bank of Vietnam (SBV).

Under the merger process, all responsibilities and duties to customers, partners, and employees of Habubank will be transferred to SHB, under the supervision and assistance of SBV.

The brand name Habubank will then no longer exist, as the name of the merged bank will be Saigon – Hanoi Bank Commercial Joint Stock Bank (SHB), which is set to have a total registered capital of nearly VND8.86 trillion ($425.2 million), and total assets of VND100 trillion.

The merged credit institution expects to serve around 500,000 customers and have 5,000 employees working for it, VnExpress reported.

As both Habubank and SHB are listed on the Hanoi Stock Exchange (HNX), the exchange ratio of the two firms stocks is set as one HBB stock is equal to 0.75 SHB stock.

At yesterday’s closing session, HBB was listed at VND7,000 per share at HNX, while the figure of SHB was VND11,400.

Habubank has opted for the merger plan since its business effectiveness, financial state, and asset quality have been adversely affected by the unsettled loan to Vinashin, the bank stated in its draft plan.

It is also unlikely that the bank will well compete in the sector given its current scale and ability, and the lack of expansion and business development plans, it added.

“Meanwhile, merging with larger banks has become trendy amid the restructuring process of the banking sector, which is backed by administrative authorities,” the bank said.

The Habubank-SHB merger is the second notable such transaction of its kind, following that of three HCMC-based banks last year.

On December 6, 2011, TinNghiaBank, Ficombank, and Saigon Commercial Bank became the country’s first three banks to be merged, with the newly-formed bank named after the latter.

In fact, it has been rumored since early-March that Habubank would merge with SHB, though it was unconfirmed by both of the banks and the central bank.

“The merger is still in the stage of ‘studying each other’,” SHB Chairman Do Quang Hien told the media last week.

In case the plan is approved by the shareholder meetings of each bank, it will still need the final nod from SBV, said Hien.

“This is a lengthy and cautious process since the merger deal must strictly follow appropriate procedures, as well as ensure safety for customers and the whole banking system,” he explained.