The restructuring of the banking system is expected to experience a new turning point next year as a number of large banks consider plans to merge with other institutions.



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The Bank for Foreign Trade of Vietnam (Vietcombank), one of the five largest commercial joint stock banks in the country, approved a plan to merge with another local institution during an extraordinary general meeting held last week. The merging of the two institutions aims to make Vietcombank the country's leading bank in terms of both scale and quality.

If Vietcombank's plan comes to fruition, it will debut a new merge model for the banks in the country. Only troubled banks were merged in the past.

Vietcombank has yet to reveal the local institution with which it will merge. However, a source close to the situation told the Saigon Times that it is eyeing a small bank in HCM City.

The source also disclosed that Vietcombank plans to sign a merger deal with Saigon Bank for Industry and Trade (SaigonBank). A State Bank of Vietnam (SBV) official has confirmed the plan, sharing that the central bank approved the plan in principle.

The official said that the two banks will submit their merger plan to the SBV for approval after their shareholders agree on the terms. The two can only proceed with the plan after obtaining approval from the central bank. Share pricing is one of the key issues of the negotiations between the two banks.

The Vietnam Economic Times reported that apart from Vietcombank, a small bank in HCM City also revealed that it could merge with the Bank for Investment and Development of Vietnam in the future.

Vietnam currently has nearly 40 banks, which will be reduced to roughly 20 through M&A by 2017. This will happen based on the banking sector’s restructuring strategy approved by the Government.

VNA/VNN