Governor of the State Bank of Vietnam (SBV) may be entitled to force poor-performing credit instructions to merge if their collapse was seen to threaten the whole banking system, according to a circular composed by SBV.
The circular containing a draft plan for merger and acquisition of credit institutions by the central bank has been sent to the institutions and made public for comment.
Under the draft plan, poor-performing credit institutions would be allowed to spontaneously merge or acquire in order to remain or develop their business. It aims 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 and supervising boards, general directors and deputy general directors of 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 the state-owned banks, joint stock banks, joint venture banks, wholly foreign banks and co-operative banks.
At present, Vietnam has 40 partially-privatized 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 licenses and are expected to debut this year as wholly foreign banks in Vietnam. (VnExpress)
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