Vietnam Daily News

Merger of 3 Commercial Banks Brings Huge Benefits: Former Governor

Written by Dailynews.vn Saturday, 10 December 2011 19:16

Merger of 3 HCM-based banks, namely De Nhat Commercial Joint Stock Bank, Vietnam Tin Nghia Bank and Saigon Commercial Bank would benefit every party involved, Cao Sy Kiem, former governor of the State Bank of Vietnam told the local newswire Vef.vn.

Specifically, the government can reduce the number of weak banks, stabilise the banking market and prevent collapse of the credit institution system. Bank owners, through merger, can guarantee their capital or else increasing bad debts and liquidity shortage will eventually drive them to liquidation. Customers' deposits are also ensured, Kiem said.

Kiem went on, saying that other credit institutions beside BIDV could invest and contribute capital to the newly-created lender during this period. Even the central bank may also acquire controlling stake, if necessary, Kiem added.

"It is essential to re-organise commercial banks facing liquidity problems and high bad debt ratios, irrespective of their sizes. Bank M&A will continue to happen in the near future and become the inevitable trend in the market", Kiem added.

Earlier, the SBV announced its approval for a plan to merge three troubled private commercial banks and assigned BIDV to manage the undisclosed government's stake in the newly-formed lender. Experts welcomed the central bank's announcement as a positive signal to the local banking system.

Source: www.intellasia.net/news/articles/finance/111350322.shtml