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Bank merger draws market's eye
Despite opening strongly, shares lost ground on both of the nation's stock exchanges yesterday, as trading resumed following a four-day national holiday.
On the Ha Noi Stock Exchange, the HNX-Index shed 0.6 per cent to close at just 79.35 points. The value and volume of trades each jumped by over 31 per cent to total VND928.9 billion (US$44.2 million) on a volume of 89 million shares.
Habubank (HBB) was the most-active share nationwide, with 12 million changing hands. Heavy sells dipped HBB to its floor price of VND6,700 after terms of its takeover by Sai Gon-Ha Noi Bank (SHB) were released.
Under the terms, the new bank created by the merger will issue brand new SHB shares. One HBB share will be swapped for 0.75 new SHB share, while one current SHB shares will be exchanged into 1.21 new SHB shares.
The new bank's charter capital will be more than VND8.86 trillion ($421.9 million), combining both banks' capital.
While SHB projects a profit this year of around VND1.85 trillion ($85.7 million), most of this will be written off to account for Habubank's accumulated losses, and the new entity will not pay a dividend this year.
The merger awaits finalisation upon a vote at the SHB shareholders meeting this Saturday.
"The market is showing concern over Habubank's bad debts," said Kim Eng Securities Co analysts. The bank has failed to recover an amount totallling VND470 billion ($22.3 million).
"What concerns investors most is the loan Habubank made to troubled State-owned shipbuilder Vinashin," the analysts wrote in a note.
The target bank admitted last Saturday that its bad debt ratio as of February had reached over 16 per cent.
On the HCM City Stock Exchange yesterday, the VN-Index finished at 472.46 points, falling nearly 0.3 per cent from last Friday's close. Market value reached some VND1.8 trillion ($85.7 million), an increase of 38.5 per cent over the prior session, as trading volume hit nearly 118.3 million shares.
Over half of the 30 leading stocks by capitalisation and liquidity retreated, dragging the VN30 Index down by 0.3 per cent to 539.72 points. Only nine codes in this group posted gains, including software giant FPT, real estate developer Khang Dien House (KDH) and Vinh Son-Song Hinh Hydropower (VSH), which hit their ceiling prices.
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