New bank merger in the offing

According to the plan, the bank suggested swapping one share of HBB for 0.75 share of SHB. After the merger, the new bank will have total chartered capital of nearly VND9 trillion and combined assets of VND100 trillion, putting it in the top 10 banks by assets.

The name of the new bank will be Saigon-Hanoi Commercial Bank and the HBB brand will cease existing upon the merger’s completion. The consolidated bank is expected to have around 500,000 clients, 5,000 employees, and several securities and asset management firms.

SHB would take over all rights, benefits and all labor and property obligations of HBB. This year, the merged bank would raise its total assets to over VND123 trillion, and keep the non-performing loan ratio at 3.2% and capital adequacy ratio at 13.22%.

HBB said on its website that it had picked Vietcombank Securities Company as the consultant for the merger deal. However, it has yet to set up a detailed timetable for the plan.

HBB also pointed out reasons for the merger, saying bad loans owed by Vinashin and its affiliates had left adverse impacts on its business performance, financial situation and asset quality since 2011. Besides, the bank has found it hard to compete with rivals in the more competitive banking system given its current small size while it has no plans to develop business.

Meanwhile, the prevalent trend is to create stronger banks following the Government’s financial and banking sector restructuring program.

The forthcoming merger will also enable the two banks to improve competitiveness and supplement operating costs.

The merger between SHB and HBB is the focus of attention among bankers after the surprise combination of three banks – Vietnam Tin Nghia Commercial Bank, De Nhat Commercial Bank and Saigon Commercial Bank in late 2011.

SHB has been classified in group one with its credit growth limit this year set at 17% by the central bank while HBB has been placed in group 3 with its credit growth quota confined to a mere 8%.

With chartered capital of around VND4 trillion, HBB has over 80 banking units and a securities enterprise. SHB, meanwhile, has VND4.8 trillion in chartered capital and a network of over 150 units and an asset management firm.

Source: The Sai Gon Time