Saigon Thuong Tin Commercial Bank, or Sacombank, is going to submit to the State Bank of Vietnam the project on merging the bank with Southern Commercial Bank, said Sacombank chairman Pham Huu Phu.

The bank’s annual general meeting (AGM) in 2013 assigned the board of directors to seek a small lender for merging. Merging with Southern Bank will enjoy advantages due to similarities in capital and owners, Phu said during an exclusive interview with the Daily.

Meanwhile, Southern Bank has also found its restructuring scheme infeasible and suggested to merge with Sacombank. Both sides have agreed on the feasibility of the project and will ask for approval from the central bank.

The merging plan has been made on voluntary basis and goes in line with the State’s principle, he added.

Concerning the gap between operation scales of the two banks, Phu said that the decision will be made at the AGM scheduled for March 25.

“The merging plan must make clear the financial situation of Southern Bank such as bad debts and capital and whether Sacombank can shoulder Southern Bank’s problems. If the merging weakens Sacombank, I believe that the plan will not be realized,” Phu added.

The State only approves a merger between two banks under which the consolidated lender can continue stable operations. The merging project is being completed and it will be submitted at the AGM on March 25.

“Merging must make the bank stronger. Shareholders even must know that how stronger the bank will be after two years. Sacombank’s shareholders will not agree to merge with a weak bank that drags Sacombank backward. Therefore, shareholders will discuss the issue carefully at the meeting to find out what benefits the merging would bring them,” Phu said.

Sacombank at the upcoming AGM will elect a new chairperson, spreading rumors that Phu will leave his post at this lender.

Concerning the issue, Phu said that Eximbank now has the need to add more staff to the board of directors while Sacombank’s situation has been stabilized. So, both sides have discussed the issue, hinting that Phu will be not sent to Sacombank any more.

Eximbank earlier acquired a 10% stake in Sacombank at VND16,000 each share. Closing on Wednesday’s session, Sacombank (STB) share prices stood at VND20,000 each, meaning Eximbank gains hefty profits inclusive of cash and stock dividends.

Speaking to the Daily, a shareholder of Sacombank said that there is a gap of development level between Sacombank and Southern Bank.

There has been no official notice from managing agencies on Southern Bank’s situation but the bank did meet problems in liquidity in the past. Southern Bank’s total asset is just a half of Sacombank, profit at one-tenth of Sacombank and network at one-third to one-fourth of Sacombank, the shareholder said.

For corporate management, Sacombank must play the role as the foundation for further development of the consolidated lender. If both sides reach the agreement, technical issues will be solved easily. Southern Bank needs time to turn better before merging with Sacombank, said the source who asked not to be named.

Source: SGT