Finally, the merger with SHB has been approved by 85.21 percent shareholders of Hanoi Building Commercial Joint Stock Bank (Habubank). Given in such current status, it seems that Habubank shareholders have little choice but agree about the merger so as to save their bank.
From the story of Habubank
Joining the Shareholders General Meeting on April 28th of this bank, it can be clearly seen what issues the bank is facing and how necessary it is to re-structure the bank.
In the presentation on financial capacity of Habubank, Director General Bui Thi Mai said that, under Vietnamese accounting standards, the percentage of bad debts in this bank came up to 16.06 percent. Especially, loans to Vinashin groups have influenced business efficiency while higher loan costs caused a significant decline in the bank’s finance and asset quality since 2011.
Answering the shareholders’ question if Habubank’s merger was too premature, Mr Nguyen Van Bang, Habubank’s CEO supposed that given the hard situation caused by recent difficulties and crisis, it should be addressed quickly before the liquidation sees a worse situation and affects the whole system.
Also at the Shareholders Meeting, for at least one time, Habubank’s Management Board regretted and said sorry to shareholders for such current situation. However, only when the problem became so serious and needed quickly addressing, did Habubank admitted their inefficient operation and released their carefully wrapped weaknesses.
To overlapped ownership
It can be seen from the story of Habubank that bad debt, management capacity, operation efficiency are the major weaknesses of many banks in Vietnam at the moment.
Besides, there is another big issue, which, if not handled well, can cause big obstruction to bank restructure. It is overlapped ownership among banks, according to which, this bank holds shares of another bank and many banks invest into securities, real estate, and fund management companies etc. Moreover, the issue comes from bank’s ownership towards Groups (both state and private groups), Groups’ ownership toward banks, banks’ ownership towards financial companies while these own groups etc.
For example, ACB contributed capital to Eximbank, and this bank invested in Sacombank while the latter owns a real estate company with long ownership chain. According to Dr Vu Thanh Tu Anh (Research Director of Fullbright Economics Programme), this situation made a results that loans are made under relationship or interest group, which cannot ensure efficiency. Meanwhile, the efficiency is the top criteria of restructure procedure, which will meet difficulties caused by overlapped ownership as any tie in the chain can affect the whole system.
Thus, without strong actions towards policies and clear principle to classify restructuring banks, methods to restructure and Government’s special management measures, it is hard to restructure banks.
KTDT
Vietnamese
