Weak banks put under hardest pressure ever

Aug 17th at 13:14

17-08-2012 13:14:45+07:00

It is expected that the plans to restructure some commercial banks will be approved in the last months of the year. However, the target of settling all weak banks within 2012 proves to be unattainable.

Governor of the State Bank of Vietnam Dao Minh Tu said on Dau tu newspaper, that except Habubank, there has been no optimal bank restructure plan submitted to the State Bank for consideration.

“The State Bank has been trying to speed up the merger and acquisition process. However, the process would still depend on whether the involved banks can draw up optimal solutions that can ensure the benefits of all the involved parties,” Tu said.

He went on to say that commercial banks have been meeting with each other to discuss the merger and acquisition on the voluntary basis.

A senior official of the State Bank said that a lot of such meetings have been made recently, including the meetings between Vietnamese banks and foreign investors. However, learning the lesson from Habubank case, where the information leaked, banks now try to keep all relating information confidential.

It happened in the past that some affairs, which nearly got successful, broke down in the last minute, because the two parties could not reach consensus on some issues. Therefore, the information leaking would not be good for the market.

However, banking experts have predicted that some merger and acquisition deals would be approved

Nguyen Thi Mai Suong, Director of the Hanoi branch of the State Bank of Vietnam, said Hanoi has three banks that need restructure. Of these, two banks have finished the drafting of the restructure plans.

Tien Phong Bank, for example, has got the nod from the government on its plan to self-restructure. Meanwhile, Habubank has also officially merged into SHB.

As such, GP Bank is the only bank from which the State Bank expects a restructure plan. To date, Suong has not received any information about the restructure plan from the bank.

Meanwhile, in HCM City, analysts now keep an eye on the banks which once received warnings from the State Bank for their violation in credit activities.

TTVN newswire has reported that Saigonese have heard the news about the possible merger deal of a finance company and a bank in the city.

Rumors have been spread out on the market about the merger and acquisition deal of PVFC, a finance company, subsidiary of PetroVietnam.

Nguyen Thien Bao, General Director of PVFC, once stated that the company is considering turning into a commercial bank. The plan may be implemented if PVFC can have a merger deal with a commercial bank.

However, a new problem would arise that if PVFC successfully turns into a commercial bank, PetroVietnam would have capital contribution to two banks, PVFC and Oceanbank. As such, PetroVietnam would have to withdraw its investment capital from one of the two banks, because the current laws do not allow this.

In early 2012, the State Bank of Vietnam stated that 5-8 banks would be merged right in the first quarter of 2012. However, only two banks have finished the restructure plan so far, by the end of the third quarter, while the Habubank – SHV is the first merger deal.

Dau tu has quoted its sources as saying that the bank restructure process has been slowing down due to the conflicts of the groups’ interests. Once the difficult period is over, banks may try to delay the restructure for their benefits. If so, the banking system would be threatened.

To Quoc newspaper has quoted an expert as saying that the State Bank should not only encourage the merger, but it also needs to apply drastic measures to put pressure on the banks, urging them to get restructured.