Commercial banks discuss M&As - again

The shareholders’ meetings of HDBank and PGBank were both organized on April 21. All of PGBank’s shareholders agreed on a plan to merge PGBank and HDBank, while 94.3 percent of shareholders agreed to do so for HDBank. The merger of two banks will start soon, with share conversion in July and the merger wrapped up in August. The schedule was a surprise to the finance community. Just days before, on March 29, when asked about the bank’s M&A plan, CEO of MBBank Luu Trung Thai said MBBank was still considering banks for the plan, including PGBank. Now, as PGBank has decided to merge with HDBank, MBBank will have to look for another partner. At the 2018 shareholders’ meeting, LienViet Post Bank stated it was considering raising charter capital, restructuring shareholders, completing an M&A, and restructuring credit institutions as requested by the State Bank. Duong Cong Minh, former chair of LienViet Post Bank, is now chair of Sacombank. Nguyen Van Huynh, who resigned as a member of LienViet Post Bank’s board of directors, has joined the board of directors of Sacombank. VietinBank, one of the biggest domestic banks, after canceling its plan on admitting PG Bank, has said it is looking for alternatives.

Asked about the failure to admit PG Bank, a senior executive of VietinBank said the negotiation process lasted too long, while the market performance changed rapidly and the two sides could not reach an agreement.

VPBank has also said it wants to raise charter capital to prepare for M&A deals and other business plans. M&As are considered a quick solution that helps banks expand their operation scale and satisfy requirements of Basel II, to take place in 2020. For their M&A plans, large banks are targeting M&A plans. First, the ‘zero-dong banks’ which had to undergo restructuring as decided by the central bank. Second, banks which have small amount of charter capital but have not been able to increase capital in the last few years. The State Bank has said that after the restructuring process, Vietnam would have only 15-17 banks. There are still 35 operating banks. Large banks are also considering seeking foreign capital to complete capital increase plans. BIDV, for example, is preparing to sell 15 percent of shares to KEB Hana from South Korea. Meanwhile, Vietcombank’s plan on selling 10 percent shares to foreign partners has received approval from the government.