Three HCM City- based commercial banks have been allowed to merge, according to Governor of the State Bank of Viet Nam Nguyen Van Binh.
Those involved include De Nhat Commercial JS Bank, Viet Nam Tin Nghia Bank and Sai Gon Bank.
The Bank for Investment and Development of Viet Nam (BIDV) will be the official representative for State capital in the new enterprise.
This has been the first domestic merger since the central bank announced its overhaul plan last month, aimed at restructuring the domestic banking system.
At a meeting held by the Ministry of Information and Communications in the capital yesterday, Governor Binh said that during the past few months, all three banks had faced difficulties related to low liquidity, having mostly utilised short-term deposits to make medium- and long-term loans. Unfortunately, liquidity capabilities were temporarily lost when short-term deposits experienced shortages.
Thanks to SBV support, bank liquidity had been improved significantly, he said, asserting that the banks had decided to merge to take full advantage of their combined location, technology, capital and human resources while cutting operating costs to create a healthier and stronger new bank with a larger network and more customers.
He added that, as a representative of State capital in the new bank, the BIDV must guarantee depositor interest while keeping the new venture from liquidation.
In the near future, the three banks would be audited on business results, assets, liabilities and debts based on which the central bank would make a final decision on the proportion of State capital to be injected into the new venture, Binh said.
From now until the end of the first quarter of next year, the SBV would finish assessing and classifying banking groups based on the same auditing reports, he added.
In October, the central bank unveiled a comprehensive banking system restructuring plan according to which mergers and consolidation would improve competitiveness, value, operating scale and reputation while lowering operating costs.
The central bank said that although some progress had been made in the banking system over the past year, the sector still lacked a competitive edge, financial ability, proper management, up-to- date technology and skilled human resources, which cause instability and latent risk.
The central bank has been looking at addressing these limitations to develop the system safely, healthily and effectively, based on large-scale operations and advanced banking administration and technological systems.
Accordingly, one of the basic principles for the restructuring process was developing a diversified banking system in ownership, scale and type to meet the diversified demands of the economy in both urban and remote areas.
Also, mergers and consolidation among banks would be implemented under a voluntary basis and ensure the interests of depositors as well as the economic rights and obligations of shareholders.
By the end of 2010, Viet Nam's banking system had one development bank, one social policy bank, five State-owned and State-invested commercial banks, 37 joint stock commercial banks, 50 branches of foreign banks, five wholly foreign-invested banks, five joint venture banks, 18 financial firms, 12 financial leasing companies and one central people's credit fund.
Yesterday, BIDV and the three banks also signed a comprehensive strategic co-operation agreement, binding BIDV to promised support for the new venture's operation after the merger.
(source: VNS)
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07/12/2011 02:59:40 PM | 