Strong Restructuring

After four years of bank restructuring, the number of commercial banks decreased from 42 to 34. The total assets increased by 20 percent, while bad debt got close to the target of 3 percent or lower.

 

In late October 2015, Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) and Southern Commercial Joint Stock Bank (Southern Bank) signed an agreement under which the latter will totally merge into the former. Nguyen Phuoc Thanh, Deputy Governor of the State Bank of Vietnam (SBV), said, "After the merger, Sacombank becomes the largest commercial joint stock bank and stands behind only four State-owned banks. This synergy is not a mechanical movement but a joining force of the two banks to bring greater benefits to customers and shareholders fit integration trend.”

 

Thus far, the banking system has basically completed the phase of bad debts. The 2015 - 2020 period is considered the time to develop the system, improve the competitiveness of credit institutions.

 

Most other banks underwent a voluntary consolidation or merger. Hence, eight banks disappeared on the map, including Tin Nghia Bank, First Bank, Habubank, Western Bank, Dai A Back, Dai Tin Bank, Southern Bank, MHB, MDBank and PGBank.

 

Some unsuccessful deals left a huge regret. GPBank, VNCB and OceanBank were taken by US dollars at a zero-dollar value. This was the final action that the central bank took when weak banks could not provide restructuring plans. The zero-dollar deals were controversial about the SBV’s roles in shouldering enormous debts from insolvent banks. However, according to a written guidance from SBV Governor Nguyen Van Binh, the State money will not be spent on the restructuring of the three banks.

 

The SBV’s compulsory takeovers for weak banks were the last resort when there were no more viable solutions. The SBV appointed Viettinbank to administer and operate VNCB; Vietinbank to administer and operate Ocean Bank and GPBank. Although the registered capital of acquired banks was over on losses, it gradually recovered following the SBV’s drastic solutions and actions to settling debts and assets.

 

The process of banking system restructuring is also made order in the system. Total assets of credit institutions rose 20 percent after nearly 4 years, from more than VND5,000 trillion to VND6,600 trillion. Agribank lost the top place in total assets, capital and network. By registered capital, Vietinbank and BIDV took the lead. Similarly, with the post-merger addition of registered capital (SCB, Tin Nghia, Ficombank, PVFC, Western Bank), SCB and PVcomBank appeared in the top group by registered capital.

Currently, some deals are stalled. Regarding the case of Saigon Commercial Bank (Saigonbank), Vietcombank agreed in principle and the rest depended on negotiations between the two banks. At the end of 2014, Vietcombank hosted an extraordinary shareholders meeting to seek favour for the merger plan but Saigonbank shareholders voted against the merger in the second quarter of 2015. Thus, this marriage failed and left open. Currently, Saigonbank’s current leaders have come from Vietcombank. On the other hand, Vietcombank is also a major shareholder at Saigonbank, holding 8.2 percent of stake.

 

Another standstill case was Nam A Bank and Eximbank. When Nam A Bank hosted an extraordinary shareholders meeting on April 17 to dismiss Chairman Nguyen Quoc, all forecasts were targeted at Eximbank. However, New Chairman Phan Dinh Tan of Nam A Bank affirmed that his lender did not hold any shares of Eximbank and this bank will continue to go on its own path of restructuring plan approved by the SBV last year. Nam A Bank has no plan to merge with other banks.