VietNamNet Bridge – Both VietinBank and PG Bank have confirmed their merger and acquisition (M&A) deal, as have Vietcombank and Saigon Bank, Sacombank and Southern Bank, BIDV and MHB, and Maritime Bank and MDB.

 

 

 

But PG Bank days later removed the information from its website. Meanwhile, VietinBank denied that the merger had occurred.

However, analysts still said the “marriage contract” of VietinBank and PG Bank would be inked by the two sides, sooner or later, because “there was no smoke without fire”, pointing out that the merger would benefit both of them.

In the latest news, VietinBank’s president Nguyen Van Thang has confirmed the deal.

For PG Bank, with VND3 trillion in chartered capital, just equal to 1/12 of VietinBank’s, and total assets of VND22 trillion, 1/30 of VietinBank’s, merging with VietinBank proves to be the best solution.

The commercial banks with chartered capital of below VND4 trillion are listed as “small banks”, which will be in disadvantageous positions in Vietnam and the region.

If it does not merge with Vietinbank, it would not be able to increase chartered capital as requested by the State Bank, once Petrolimex, a petroleum product distributor, now holding 40 percent of capital, no longer pours capital into the bank.

Petrolimex, a state-owned corporation, has been asked by the government to withdraw capital from non-core business fields.

PG Bank would help VietinBank “take a shortcut” in its path to become the “bank of regional stature”.

Though VietinBank’s indexes are very good (VND37 trillion in chartered capital, VND661 trillion in total assets), it does not have great advantages in retail banking.

VietinBank, which has been focusing on wholesale banking, needs a large network nationwide to implement its plan to develop retail banking services in the coming years. 

As such, taking over PG Bank would be the solution for VietinBank to obtain a large network in Mekong River Delta.

An analyst commented that its largest shareholder, Petrolimex, could be a big source of deposits, thanks to its large personnel and distribution network nationwide.

He said it would be more favorable for VietinBank to negotiate with Petrolimex on the share-swap ratio, because Petrolimex is now trying to disinvest from PG Bank as soon as possible. 

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