Vietnam considers major mergers in 2015 to strengthen its banks
Vietnam considers major mergers in 2015 to strengthen its banks
A number of Vietnam's banks may merge with each other this year in an effort to strengthen the industry, the country's central bank said.
Among six to eight mergers likely in 2015, Vietnam's biggest bank by market value, Vietcombank, could merge with unlisted Saigon Bank for Industry and Trade and Hanoi-based VietinBank may join with unlisted OceanBank, the State Bank of Vietnam said in a briefing note, which was seen by Reuters.
BIDV could take similar steps with Mekong Housing Bank and VietinBank could also merge with Petrolimex Bank, according to the central bank note.
Vietnam is trying to clean up its finance sector which has 42 local banks, many of which are burdened with non-performing loans after a decade of rapid expansion. Economists view the sector as overcrowded, with too many small and undercapitalised operators.
The central bank has already eased foreign ownership constraints and set up an asset management company to buy up debts and reduce banks' bad loan ratios.
"The positive side of these mergers is it uses big banks to force restructuring in small lenders and takes advantage of the financial capability of the big banks to support liquidity," d Do Thien Anh Tuan, an economist at the Fulbright Economics Teaching Programme in Ho Chi Minh City, said.
Other mergers in the works include Maritime Bank with Mekong Development Bank, and Sacombank with Southern Bank preparations for which began last year.
Banks' non-performing loans were 3.87 percent of total loans in October 2014, according to central bank data. The government is aiming to cut non-performing loans to 3 percent of loans by the end of this year.
