Thien Thanh Corp. to join TrustBank restructuring

More than 200 shareholders holding a combined stake of over 80% present at the meeting approved the scheme for restructuring of TrustBank, including the jobs to be done in collaboration with Thien Thanh, according to TrustBank.

The bank will use the resources from corporations, organizations and individuals at home to resolve its problems.

In the short term, TrustBank will maintain its operations with traditional services for the Mekong Delta and retail banking service for economic zones. In addition, it will provide services for the building material industry and low-cost housing development.

In the long term, with Thien Thanh Corporation as its companion, the bank will have a new orientation for development, with an aim to specialize banking services.

TrustBank declined to reveal the stake held by Thien Thanh, explaining that the bank restructuring scheme is being considered by the central bank.

A source told the Daily that Thien Thanh, along with new shareholders, would hold the dominant stake, so there would be changes in TrustBank’s brand identity and governance. However, its staff and branches will not be affected too much.

Since 2011, TrustBank has been experiencing hardship because of unfavorable economic developments, high inflation, tightened fiscal and monetary policies and the frozen real estate market, said the source.

The bank had set aside a huge fund for lending to the property sector. By end-February 2012, property-related outstanding loans had reached 53% of its total assets, and so its bad debt ratio has risen sharply as the realty market has ran into trouble.

Moreover, shortcomings in risk management and internal audit also spell trouble for TrustBank. It is in the list of nine weak banks subject to restructuring upon request of the central bank.

Therefore, TrustBank hopes its strategic partner will help resolve the problems of poor liquidity, falling asset quality and rising credit risk provision. In addition, the bank looks to improve its governance and lay down the basic principles for governance and risk management, so that it can resume normal operations within the first half of 2013.

TrustBank was established in 1989 with its headquarters in Long An. By the end of 2011, its total assets had amounted to VND28 trillion and its chartered capital had increased 15-fold compared to the figure on the date of establishment.

Meanwhile, Thien Thanh Corporation with chartered capital of VND1 trillion is operating in real estate, building materials and trade and auto markets.