The State Bank of Viet Nam (SBV) acquired all the equity of the Viet Nam Construction Joint Stock Commercial Bank (VNCB) on Thursday.

The development took place following a decision taken by Governor Nguyen Van Binh on the same day.

As the central bank had stated a month ago, stakes have been transferred at the price of zero dong per share, and the acquisition is compulsory to restore the VNCB's payment ability in line with the general efforts to create a healthier banking system.

Following the takeover by SBV, the construction bank is now a one-member limited company with a charter capital of VND3 trillion (US$142.86 million). This terminates all statuses, including the rights and interests, of existing shareholders in the bank.

The new institution made its debut in HCM City on Thursday, when Vietcombank Deputy General Director Nguyen Van Tuan was reported to have resigned from his post to become the Chairman of VNCB, as appointed by the central bank.

SBV officials believe the participation of the State-run Vietcombank, one of the major lenders in Viet Nam, will help the fragile bank succeed in its restructuring schemes and assure the public of its more efficient and secure business performance.

VNCB General Director Dam Minh Duc will continue to hold his position.

The Government has placed VNCB under special supervision since the bank has shown significant weakness, and some of its former top executives were arrested for an alleged violation of State regulations.

The authorities decided on the acquisition in February after the bank failed to present a plan to assure its minimum equity required by the law in late January.

The SBV said it would now coordinate with relevant agencies to develop the new institution, which inherits all the legal rights and responsibilities of the former organisation.

"With the role of the SBV and the collaboration of ministries and sectors, along with the close direction provided by the Government, the restructuring of VNCB will achieve its targeted goals," the central bank said in a news release.

At a February meeting, VNCB's management board said the changes would offer a turning point for new opportunities in 2015, during which it expects profitability and would work towards strengthening the foundations for multi-function operations in the future.

"Detailed schemes and measures have been well prepared for VNCB's forthcoming business activities," the bank stated on its website. SBV officials said last week that the GP.Bank and Ocean Bank might also be nationalised.

Construction bank

VNCB needs VND40 trillion (US$1.9 billion) to restructure its operations, said Deputy Governor of the State Bank of Viet Nam Nguyen Phuoc Thanh.

Speaking with local media at the ceremony to announce the change of VNCB's operating model into a one-member limited company, Thanh said the capital would come from various sources, including the VNCB's sale of bad debts for the Vietnam Asset Management Company and the SBV's refinancing loan.

Thanh noted that with the SBV's ownership, people would feel more secure when transferring their money to the bank. Meanwhile, several major banks also promised to support VNCB by sending the bank their money. Thus, the VNCB would receive the capital it needs for its operations.

The VNCB was established by Trust Bank in May 2013. Trust Bank was operational for 23 years, with charter capital of VND3 trillion ($142.85 million). In mid-2014, the SBV appointed new officials to the VNCB after some former top executives at the bank were arrested for allegedly violating state regulations.

The VNCB, which is set to be restructured, signed a comprehensive cooperation agreement with Vietcombank to facilitate growth and sustainability last August.

According to the central bank, its takeover of the VNCB will terminate all statuses, including the rights and interests of existing shareholders in the construction bank. However, the legal rights and interests of depositors at the bank will be preserved. 

VNS