VietNamNet Bridge - Chairman Nguyen Van Thang of the Hanoi-based Vietnam Bank for Industry and Trade (VietinBank) said the bank would only support OceanBank and GPBank restructuring under the direction of the State Bank of Vietnam (SBV).

Vietinbank shareholders' meeting 2015.

At a Vietinbank annual shareholders' meeting yesterday, Thang said there were rumors that Vietinbank will not only merger with PGBank but also GPBank or OceanBank. Earlier, a manager of VietinBank branch in HCM City was appointed as the legal representative of the SBV at OceanBank.

"VietinBank has no plans to merge but only participates in OceanBank and GPBank with the role of supporting restructuring. It is our political duty. Under the SBV direction, VietinBank will support them in terms of executive personnel in order to help them stabilize operations. In the future, M&A may be considered, but with conditions that the partners must benefit our bank," Thang said.

At the meeting, VietinBank shareholders agreed to merge with Petrolimex Group Commercial Joint Stock Bank (PGBank) in the third quarter this year.

PG Bank is currently a subsidiary of Vietnam National Petroleum Group (Petrolimex).

In documents delivered to the shareholders, VietinBank said it had actively sought partners, and PGBank is a potential credit institution for merger, to help turn Vietinbank into the leading bank in Vietnam, with a regional scale.

Thang said the merger would help Vietinbank increase its capital, develop and expand branches, foster retail services and step up its lending and investments. The move was expected to foster further co-operation between Vietinbank and Petrolimex's other subsidiaries.

The move would be finalised after the State Bank of Vietnam officially approves the merge in the third quarter, he added.

After the merger, the total assets of VietinBank will increase by VND25 trillion, its charter capital will rise by VND3 trillion to VND40 trillion. In particular, VietinBank can use a network of more than 6,600 gas selling points and accompanying financial services of Petrolimex.

After the merger, the new organization will be still called the Vietnam Bank for Industry and Trade.

Thang said that Vietinbank would also register with the Central Securities Committee to issue new shares, establish a new financial firm to complete the merge and publish information in the third quarter.

After the merger with PGBank, the new bank will establish a finance company to serve the specific customer group of Petrolimex and individual customers at petrol stations. This firm will be named VietinPG Finance, with charter capital of VND1 trillion.

Through PG Finance, Vietinbank hopes to benefit from Petrolimex's diverse business network that includes 6,600 gas stations and various Petrolimex customers in need of financial and monetary services.

Thang said that PG Bank's Board of Supervisors and Board of Directors would resign from their current positions after the move. Vietinbank promised to then arrange suitable positions for the senior officials.

The change rate for PG Bank shares to Vietinbank shares is 1:0.9, which means Vietinbank will exchange 270 million of its shares for 300 million of PG Bank shares, he added.

He said that Vietinbank would employ all PG Bank's employees after the merge and ensure that they receive the same incomes and benefits in the coming six months before the merge.

Vietinbank would evaluate PG Bank's employees' salaries and adjust them to be in accordance with Vietinbank's regulations six months after the merge, Thang said.

PGBank was formerly the Dong Thap Muoi Rural Joint Stock Bank, established in 1993. The bank has charter capital of VND3 trillion and total assets of nearly VND25.8 trillion. PGBank’s strategic shareholder is the Vietnam National Petroleum Corporation (Petrolimex) with 40% of charter capital.

In PGBank's annual report for 2014, their charter capital was VND3 trillion ($142.86 million) and total asset values amounted to VND25.78 trillion ($1.23 billion). Its outstanding loans reached VND14.50 trillion ($690.48 million) and pre-tax profits hit VND168 billion ($8 million).

Vietinbank had VND661 trillion ($31.48 billion) in total assets and roughly VND37 trillion ($1.76 billion) at the end of last year.

In 2014, its pre-tax profits hit about VND7.3 trillion ($347.62 million), down 5.8 per cent over the previous year. Outstanding loans grew 18 per cent year-on-year to reach VND542.68 trillion ($25.84 billion).

For 2015, the Vietinbank projects deposit growth of 14 per cent and loan growth of 13 per cent, and will maintain a bad debt ratio below three per cent.

VNE/VNA/VNN