VietNamNet Bridge – PetroVietnam Finance Corporation (PVFC) has finally found an ideal solution for it: “getting married” with a commercial bank – Western Bank. This may trigger a new wave of merging finance companies into banks in the future.
With merger deal, Western Bank, PVFC, PetroVietnam have “happy ending”
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PVFC - Western Bank merger deal goes ahead
PVFC, one of the two parties of the deal, late last week still denied the merger
deal with Western Bank, saying that the plan has not been approved by the Prime
Minister.
Meanwhile, Western Bank many times implied that it would merge into the finance
company, and that the plan has got the nod from the Prime Minister.
It seems that the denial of PVFC has been ignored by investors, who have got
uninspiring with similar things. The involved parties in Sacombank takeover
affair and Habubank merger into SHB once denied the rumor about the deals, but
they finally did exactly the things people thought they would do.
If the merger affair takes place as people believe, the market would have a new
very big bank which has the chartered capital of VND9 trillion and the total
assets of VND100 trillion.
A question has been raised that how much Western Bank would cost.
Vietstock, a website specializing in providing financial information, said that
big shareholders of Western Bank had successfully transferred their stakes
before.
The website has also quoted its reliable sources as reporting that KBC and SGT,
the two big institutional investors of Western Bank have sold their Western Bank
shares for VND10,000 dong per share. This could be a price level for PVFC for
reference when defining the purchase price.
A new wave of finance company – bank merger?
Commenting about the move by PVFC to merge into Western Bank, analysts believe
that the finance company has taken a wise move. What PVFC still lacks is not the
capital (its chartered capital now is VND6 trillion), but the right to operate
as a commercial bank and provide banking services. The merger into Western Bank
would give it the right.
Meanwhile, PVFC would also be able to take full advantage of the experiences and
the network of the banking partner.
However, analysts have also warned that it would be very difficult to manage the
operation of the new bank, because a finance company and a commercial bank have
different styles of working and different business culture.
Dr. Cao Sy Kiem, former Governor of the State Bank of Vietnam, now Chair of the
Vietnam Small and Medium Enterprises’ Association, on one hand, said on Dau tu
that PVFC has taken a reasonable step, on the other hand, said the merger
between a finance company and a commercial bank does not fit everyone.
Therefore, Kiem does not think that the PVFC – Western Bank model would be
followed by other financial institutions when they restructure the operation.
Also according to Kiem, of the current operational finance companies, only PVFC
and EVN Finance, which has the chartered capital of VND2.5 trillion, have large
operation scale. Meanwhile, the others are very small with the modest capital of
hundreds of billions of dong.
Therefore, it would be difficult for the finance companies to find commercial
banks to merge. In principle, a commercial bank has the chartered capital of
VND3 trillion at minimum.
Economists also think that merging finance company and commercial bank proves to
be not the best solution, because the two financial institutions operate for
different purposes, while the “marriage” of the two would not bring good things.
US$1=VND21,000
Compiled by C. V