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HCM City bank merger gets official go-ahead
Three HCM City- based commercial banks have been allowed to merge, according to Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh.
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Those involved include De Nhat Commercial JS Bank, Vietnam Tin Nghia Bank and Sai Gon Bank.
The Bank for Investment and Development of Vietnam (BIDV) will be the official representative for State capital in the new enterprise.
This has been the first domestic merger since the central bank announced its overhaul plan last month, aimed at restructuring the domestic banking system.
At a meeting held by the Ministry of Information and Communications in the capital on December 6, Governor Binh said that during the past few months, all three banks faced difficulties related to low liquidity, having mostly utilized short-term deposits to make medium- and long-term loans. Unfortunately, liquidity capabilities were temporarily lost when short-term deposits experienced shortages.
Thanks to SBV support, bank liquidity has been improved significantly, he said, asserting that the banks had decided to merge to take full advantage of their combined location, technology, capital and human resources while cutting operating costs to create a healthier and stronger new bank with a larger network and more customers.
He added that, as a representative of State capital in the new bank, the BIDV must guarantee depositor interest while keeping the new venture from liquidation.
In the near future, the three banks would be audited on business results, assets, liabilities and debts based on which the central bank would make a final decision on the proportion of State capital to be injected into the new venture, Binh said.
The same day, BIDV and the three banks also signed a comprehensive strategic co-operation agreement, binding BIDV to promised support for the new venture's operation after the merger.
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