PVFC-Western Bank deal triggers wave of finance company-bank merger?
PVFC-Western Bank deal triggers wave of finance company-bank merger?
PetroVietnam Finance Corporation (PVFC) has finally found an ideal solution for it: “getting married” with a commercial bank – Western Bank. This may trigger a new wave of merging finance companies into banks in the future.
PVFC - Western Bank merger deal goes ahead
PVFC, one of the two parties of the deal, late last week still denied the merger deal with Western Bank, saying that the plan has not been approved by the Prime Minister.
Meanwhile, Western Bank many times implied that it would merge into the finance company, and that the plan has got the nod from the Prime Minister.
It seems that the denial of PVFC has been ignored by investors, who have got uninspiring with similar things. The involved parties in Sacombank takeover affair and Habubank merger into SHB once denied the rumor about the deals, but they finally did exactly the things people thought they would do.
If the merger affair takes place as people believe, the market would have a new very big bank which has the chartered capital of VND9 trillion and the total assets of VND100 trillion.
A question has been raised that how much Western Bank would cost.
Vietstock, a website specializing in providing financial information, said that big shareholders of Western Bank had successfully transferred their stakes before.
The website has also quoted its reliable sources as reporting that KBC and SGT, the two big institutional investors of Western Bank have sold their Western Bank shares for VND10,000 dong per share. This could be a price level for PVFC for reference when defining the purchase price.
A new wave of finance company – bank merger?
Commenting about the move by PVFC to merge into Western Bank, analysts believe that the finance company has taken a wise move. What PVFC still lacks is not the capital (its chartered capital now is VND6 trillion), but the right to operate as a commercial bank and provide banking services. The merger into Western Bank would give it the right.
Meanwhile, PVFC would also be able to take full advantage of the experiences and the network of the banking partner.
However, analysts have also warned that it would be very difficult to manage the operation of the new bank, because a finance company and a commercial bank have different styles of working and different business culture.
Dr. Cao Sy Kiem, former Governor of the State Bank of Vietnam, now Chair of the Vietnam Small and Medium Enterprises’ Association, on one hand, said on Dau tu that PVFC has taken a reasonable step, on the other hand, said the merger between a finance company and a commercial bank does not fit everyone.
Therefore, Kiem does not think that the PVFC – Western Bank model would be followed by other financial institutions when they restructure the operation.
Also according to Kiem, of the current operational finance companies, only PVFC and EVN Finance, which has the chartered capital of VND2.5 trillion, have large operation scale. Meanwhile, the others are very small with the modest capital of hundreds of billions of dong.
Therefore, it would be difficult for the finance companies to find commercial banks to merge. In principle, a commercial bank has the chartered capital of VND3 trillion at minimum.
Economists also think that merging finance company and commercial bank proves to be not the best solution, because the two financial institutions operate for different purposes, while the “marriage” of the two would not bring good things.
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vietnamnet
