Vietnam - Plans afoot to restructure Vietnamese banks

Some five to eight commercial banks are expected to be merged in the first quarter of 2012, according to the State Bank of Vietnam’s (SBV) announcement in the early year. However, solely two banks have had restructuring plans finalised so far and the first ever merger is that between Habubank and SHB.

Apart from Habubank, hardly have any optimal plans have been proposed to the central bank, deputy Governor of SBV Dao Minh Tu revealed.

The merger and acquisition (M&A) market has been relatively bustling lately as feeble banks have been anxiously seeking potential domestic and foreign partners, according to another insider. Yet, almost all related information has been undisclosed, which is also the central bank’s requirement on M&A affairs.

In all likelihood, the last four months of this year could witness additional M&A deals and self-restructuring of several banks.

Presently, there are credit institutions in Hanoi that are required to conduct restructuring, two of which have by far mapped out detailed plans, said director of SBV Hanoi branch Nguyen Thi Mai Suong. Specifically, TienPhong Bank has been approved to undertake self-restructuring and Habubank was allowed to be merged with SHB. GPBank is the other which has failed to bring forward the reorganisation scheme to this agency as yet.

In the meantime, HCM City has seen widespread rumours of a remarkable M&A deal associated with Petrolvietnam Finance Corporation (PVFC).

General director of this giant Nguyen Thien Bao earlier unveiled intention of converting into a commercial bank probably by merging with another credit institution. What matters is Petrolvietnam Corporation (PVN) would then hold stake at two lenders (PVFC and Oceanbank) at a time. PVN, as such, would be forced to withdraw capital from either or have these two united.

Several experts doubted the banking restructuring process would come to a halt as liquidity tension has almost been over. Should the situation remain, the system safety may suffer. Therefore, besides encouragement for banks’ voluntary reform, it is necessary the central bank push further feeble banks to speed up the restructuring process.

VietBiz24

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