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Struggling banks face merger, liquidation
Poor-performing credit institutions have been told they could be forced to merge or be acquired by the State Bank of Vietnam if their collapse was seen to threaten the whole banking system.
A circular containing a draft plan for merger and acquisition of credit institutions by the central bank has been sent to the institutions and its available for public comment.
Under the drat plan, poor-performing credit institutions would be allowed to spontaneously merge or acquire in order to remain or develop their business.
The draft plan states the goal is to set up credit institutions with bigger scale and better and safer performances and is in line with integrations going on around the world.
In order to reduce or limit illegal insider trading in advance of mergers and acquisitions, the draft plan forbids members of the executive board, supervising board, general director and deputy general director at the credit institutions to transfer or contribute stake or capital.
In cases where the stake transfer or contribution is unavoidable, the credit institutions must seek approval from the central bank.
Before implementing mergers and acquisitions, credit institutions must have an approval in principle and official approval.
The draft plan covers merger and acquisition activities at State-owned banks, joint stock banks, joint venture banks, wholly foreign banks and co-operative banks.
In the latter part of last year, as many as nine small banks had reached the point where they could be closed because they each had a charter capital of less than 1 trillion VND (37.47 million USD). By the end of the year, however, all the banks had managed to increase their charter capital and remain in business.
Vietnam has 40 part-privatised banks and joint stock banks, four State-owned banks, one bank for social policies, one bank for development, one institution for deposit insurance, two wholly foreign banks, five joint-venture banks and about 40 branches of foreign banks. Three foreign banks have been granted licences and are expected to debut this year as wholly foreign banks in Vietnam.
VietNamNet/VNA
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