VietNamNet Bridge – The number of commercial banks will be cut by a half from 30 currently, the head of the State Bank of Vietnam (SBV) has confirmed.

When asked if SBV has the plan to cut down the number of Vietnamese commercial banks to 14-17 in the next three years as stated by some high ranking officials, Governor of the State Bank of Vietnam Nguyen Van Binh said the State Bank believes the number (14-17 banks) fits the Vietnam’s national economy’s scale.

However, he added that 14-17 banks is the goal Vietnam strives to, while the plan cannot be done overnight.

Economists some years ago raised a question that if Vietnam, a small economy, needed so many commercial banks and if it was necessary for the State Bank to stop licensing more banks.

However, they were told that Vietnam, which was developing rapidly and integrating more deeply into the world, needed to have more banks to serve the increasingly high demand from individual clients and businesses, especially importers and exporters.

And the issue has been put into discussion again. The State Bank has shown its strong determination to make a sharp cut on the banking system in a plan to restructure it.

Regarding the rumor about the merger of Sacombank and Southern Bank, and the merger of some medium banks in 2014, Binh said the watchdog agency needs to follow necessary procedures strictly before making decision. The most important factor for the merger deals to succeed is the high consensus of the banks’ shareholders about the merger.

Prior to that, Chief Inspector of the State Bank of Vietnam Nguyen Huu Nghia told Thoi bao Kinh te Saigon that the 2014 bank restructuring plan would focus on the stability and the safety of banks’ operation.

Nghia said merger and acquisition would still be the major tendency of the restructure program. However, the restructure would be carried out not only by the weak banks, but by the better banks as well.

“Banks should think of improving their competitiveness with voluntary merger deals,” he said.

“I have not received any official proposal so far this year, but I know banks are moving ahead with the merger and acquisition plans,” he said. “The reduction of the number of commercial banks is foreseeable.”

In the latest news, a lot of commercial banks have reported loss for 2013. The Asia Commercial Bank (ACB), one of the Vietnamese biggest banks, has reported the loss of VND293 billion in the fourth quarter of 2013.

Eximbank has for the first time since 2009, when it began listing shares on the bourse, reported the loss of VND222 billion in the fourth quarter of 2013.

Other banks luckily did not take a loss, but have reported the sharp falls in profits. Vietinbank, for example, saw the profit down by 60 percent in the fourth quarter of 2013, while the Military Bank saw the non-performing loan ratio increasing by 50 percent and the profit decreases in all types of business.

SHB’s profit in the fourth quarter decreased by 70 percent, while Techcombank has estimated the13.7 percent decrease in the 2013’s profit in comparison with the year before.

TBKTSG