Banking M&As - Powerful Transitions

Since May 25, the whole system of MHB is operated under the legal status of BIDV. The stock's swap ratio is 1: 1 and a joint brand identity of BIDV and MHB has been completed. Accordingly, the entire process takes only 55 days.

 

Tran Bac Ha, BIDV Chairman, said that this is the fastest standard merger. Right on May 25, the whole system of MHB, including brand entity, headquarters, 44 branches and 187 transaction offices nationwide, were switched to the BIDV system.

 

On May 22, VietinBank and PGBank were officially merged. After this merger, VietinBank has its total assets increased by VND25 trillion and a charter capital increased by VND3 trillion; becoming the bank with the largest charted capital. The bank also has an additional 16 branches, 63 transaction offices and saving funds from the PGBank's network. VietinBank will open markets to communes and villages and provide banking services to 2,200 gas stations of the Petrolimex and 4,000 gas stations of agents of Petrolimex. The merger will gain advantages of VietinBank through agreement with Petrolimex that PGBank has signed with Petrolimex within 10 years; VietinBank can exclusively sell financial products through the internal system of the Petrolimex and its agents.

 

As for BIDV, after merger, the bank has its total assets increased to VND700 trillion. The charter capital of the bank after the merger has reached over VND34 trillion. BIDV will have 240 transaction outlets and dealer relationships with nearly 300 domestic and foreign banks in 50 countries worldwide. The whole system will have 1,000 transaction units nationwide with more than 24,000 staff. With the advantage of MHB, BIDV will adopt faster and better penetration strategy in the field of agriculture, high technology and focus on large-scale livestock farming and cultivation technology of Israel and Japan.

The huge merger of banking sector took place very smoothly. For nearly two months, after the information merger was announced, there have been no signs of unexpected withdrawal and deposit.

 

It is easier to explain that such banks are owned by the State. According to Tran Bac Ha, MHB has good liquidity and very low bad debts while the state still holds more than 90 percent of the bank so the merger is a way the boss moved his wealth from this bag into another bag.

 

According to experts, the financial markets are very sensitive; the merger of big banks will reduce the burdens on the Government to embrace the bad debts. The process of M&A of the banking sector also aims to reduce the NPLs by 3 percent by the end of this year.

 

However, the process of restructuring the banks has not reflected the core aspects; the problems like cross-ownership and bad debts have not been adequately addressed. The state-owned commercial banks have dominated the system while the majority of the banks are under-represented, with less equal competition.

 

Regarding the banking sector's restructuring, Nguyen Van Binh, Governor of SBV noted that the restructuring has resulted in 11 Vietnam banks listed in the top 1,000 banks of the world in 2014, as announced by the Banker. In addition, the ratings of the banks of the Southeast Asia, Vietnamese banks have Tier 1 safety indicators of the top 10 banks of the region.

 

The SBV aims to promote the restructuring of the industry to help merge the small banks weak into the large banks and even, the M&A among the large banks. Therefore, M & A in this sector would be vibrant in the coming period. The SBV has reduced its expectation for M&As of 20 banks in the system and this year alone, there are about 6-7 mergers. Currently, the market is waiting for the M&A in upcoming time after the events of May.