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WHOLESALE BANKING | Cesar Tordesillas, Vietnam
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Shareholders approve HHB-SHB merger

The draft plan to merge Hanoi Building Commercial Bank into Saigon-Hanoi Commercial Bank has been approved by shareholders of both banks.

 

It was likewise approved by the central bank.

However, the deal once concluded will send the bad debt ratio of the merged lender up to nearly 13%.

The merger was given the consensus from over 99% of the total number of holders of voting shares from a total of 488 shareholders of SHB in its annual general meeting in Hanoi. Similarly, HBB’s general meeting in Hanoi on April 28 saw up to 85.21% of its shareholders passing the scheme.

Nguyen Van Le, general director of SHB, confirmed to shareholders in the annual general meeting that the ratios of bad debts and overdue loans of the consolidated bank would stay at 12.88% and 21.32% respectively. Le attributed the high non-performing loan ratios to loans owed by the loss-making Vietnam Shipbuilding Industry Group (Vinashin).

Meanwhile, well-informed sources told the Daily that the merged bank would suffer a total accumulated loss of VND1.829 trillion.

Regarding financial solutions, Le said the bank planned to set aside risk provisions for Vinashin’s loans and its bonds within five years. The provisions will be VND372 billion for loans and VND72 billion for bonds of Vinashin per annum, Le clarified.

Notably, 30% of Vinashin’s outstanding balances and 30% of its bonds will be issued into Government-guaranteed bonds. The bonds later would be treated as collateral for the open market operation to ‘mobilize low-cost capital for SHB’. And SHB will use the remaining outstanding balance as mortgages to receive recapitalization from the central bank with lending rates three percent lower than the normal level.

In line with the agreement on share swapping between the two banks, HBB shareholders will enjoy 0.75% of HBB’s VND4.050 trillion chartered capital as cited by SHB chairman Do Quang Hien. And the remaining 0.25% will be given to SHB shareholders, Hien stated.

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