Some more Vietnam banks to undergo restructuring

VietNamNet Bridge – More commercial banks have got the go-ahead from the State Bank of Vietnam on their restructure plan.

The central bank has frankly said that it has put the banks into the list of banks to be restructured because the said banks have weak liquidity.

The State Bank of Vietnam (SBV) confirmed at the press briefing late last week that GP Bank, Navibank, Trust Bank and Western Bank would be added into the list of the banks to undergo the restructuring from now until the end of 2012.

The reports released by the banks show that their bad debt ratios are just around two percent of the total outstanding loans. However, the central bank’s inspectors and independent auditors have found out that the bad debt ratios of the banks have reached tens of percent.

A bank has reportedly had the bad debt ratio reaching the record high of 60 percent and had lost the chartered capital.

The four banks still have not found optimal restructure solution. However, it is certain that they must undergo the restructure process right in 2012.

The central bank has frankly said that it has put the banks into the list of banks to be restructured because the said banks have weak liquidity.

Meanwhile, the State Bank of Vietnam has also informed that it would submit to the government the plan to set up a national debt trade company in mid-November. The plan would help accelerate the bank restructuring process.

Dau tu has quoted its reliable sources as reporting that a merger and acquisition (M&A) deal between the two banks in the south has nearly been completed, even though the two banks are not the subjects to compulsory restructuring.

Some other banks have been taking the first steps in their plans to merge into other banks. In general, the M&A has been encouraged by the State Bank. As such, the number of banks to kick off the restructuring may be higher than four in 2012.

The low transparency in information exposition is the common thing of the four banks subject to the compulsory restructuring. However, the restructuring projects for Western Bank and Navibank have been somewhat clear.

Of the four banks, Navibank was the first one that held the annual 2012 shareholder’s meeting. The bank reported that its bad debt ratio had been 3.14 percent by June 30, while the post-tax profit in the first six months of the year had reached 91.5 billion dong, a slight decrease from the same period of the last year.

Dang Thanh Tam, a member of the Board of Directors of Navibank, has stated the bank would use the undistributed profits to carry out the restructuring itself.

This has been confirmed by Nguyen Van Dung, Deputy Director of the HCM City Branch, who said that Navibank would restructure with its own resource, while no need to merge into another bank.

As for Western Bank, the bank’s situation is considered problematic since it has lent big money to shareholders and back-door companies.

The audited finance report of the bank showed that in 2011, the bank’s credit growth rate was 123.5 percent, while the bank’s profit was very modest with the return on equity ROE at 4.84 percent only.

Sources have said that Western Bank would merge into PetroVietnam Finance Company. The restructuring project would be consulted with the shareholders at the shareholders’ meeting to be held in November or December.

There has been limited information about GP Bank and Trust Bank. The former bank remains a small bank after seven years of operation. No reports about the business performance and shareholder’s structure have been made public, except the 2010 annual report. The report showed the bad debt ratio was 1.83 percent only.

Compiled by Mai Chi

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