MSB shareholders reject M&A proposal with another Vietnamese bank

April 25, 2023 | 10:59
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With only a paltry 56 per cent of shareholders having voted in favour of the merger, the proposed collaboration between MSB and another Vietnamese bank, allegedly PGBank, has failed to meet the required threshold of 65 per cent, thereby casting a shadow of doubt over a potential merger and acquisition (M&A) deal.
MSB shareholders reject M&A proposal with another Vietnamese bank
MSB's AGM 2023

On April 21, Maritime Bank (MSB) held its annual shareholders' meeting for 2023. CEO Nguyen Hoang Linh stated that in 2023, MSB aims to achieve a pre-tax profit of $274 million, a 9 per cent increase compared to 2022. Projected total assets are expected to increase by 8 per cent to $10 billion, while the bad debt ratio is expected to be kept under 3 per cent.

“This cautious strategy for 2023 seeks to sustain effective growth while safeguarding capital and minimising credit risks, with the prioritisation of expanding MSB's share of the retail customer segment as the primary driver of growth,” said Linh.

Specifically, MSB bank also indicated a potential M&A deal with a currently operating commercial bank in Vietnam that meets certain criteria, including average total asset value, strong credit quality, and adequate owner equity.

Despite numerous market speculations regarding the identity of MSB's merger target, such as Petrolimex Joint Stock Commercial Bank (PGBank), shareholders raised concerns during the meeting, citing previous unsuccessful merger cases within the banking system, and questioned the potential hasty approach of MSB's merger decision-making.

In response, Linh stressed the bank's experience in managing operations and M&As, assuring that this process will not significantly impact MSB’s profitability, performance outcomes, or loan ratio.

MSB's Board of Directors have exercised due diligence in their approach to any merger decisions, and further considerations must be taken into account before an official plan is established.

Elaborating on Linh's response, Nguyen Hoang An, vice chairman of MSB's Board of Directors, confirmed that the board itself is still uncertain about the proposed merger plan and is seeking shareholders' opinions.

“The viability of any merger ultimately depends on the State Bank of Vietnam's (SBV) decision on whether MSB has the capacity to accommodate another bank. This is merely a preliminary request for feedback, as the shareholders hold full authority to determine whether to pursue the merger or not,” An said.

Overall, MSB's cautious approach to financial growth and risk management, combined with its strategic considerations for potential mergers, reflect the bank's commitment to maintaining a strong financial position in the market, ensuring long-term success, and ultimately fulfilling the expectations of its stakeholders.

The outcome of the AGM has left the fate of the proposed merger with a Vietnamese financial institution hanging by a thread, as only slightly more than 56 per cent of shareholders voted in favour of the merger proposal, failing to meet the required threshold of 65 per cent.

Furthermore, the SBV has set a credit limit for the beginning of 2023, but MSB's credit exposure has already hit the roof in the first quarter of the year.

"Currently, MSB has seen a remarkable surge in credit growth, hitting 13.7 per cent. Looking ahead, the bank plans to undergo a portfolio restructuring, retrieving any delinquent debts to maximise our net interest margin. Furthermore, MSB intends to apply for additional credit limits from the SBV," revealed Linh.

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By Luu Huong

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