The Vietnam Bank for Industry and Trade (Vietinbank) will merge with Petrolimex Group Commercial Joint Stock Bank (PG Bank) in the third quarter of this year, said Nguyen Van Thang, Chairman of Vietinbank's Board of Directors, at the bank's Annual Shareholders' Meeting.

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

"Vietinbank has actively searched for credit institutions suitable to its development strategies. We have found that PGBank is a promising institution to merge with us," he said.

Thang said his organisation plans to become a banking and finance group with a strong position in the domestic banking system. It is also set for gradual expansion in international markets.

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

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

He said that Vietinbank will 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.

He said that Vietinbank will set up a financial company named PG Finance that will have a chartered capital of VND1 trillion and offer services to Petrolimex's customers after the merge.

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

The merge will increase Vietinbank's total assets by 25 trillion VND (1.19 billion USD) to 685 trillion VND (31.7 billion USD) and its chartered capital by 3 trillion VND (142.86 million USD) to more than 40 trillion VND (1.85 billion USD).

In PGBank's annual report for 2014, their charter capital was 3 trillion VND (142.86 million USD) and total asset values amounted to 25.78 trillion VND (1.23 billion USD). Its outstanding loans reached 14.50 trillion VND (690.48 million USD) and pre-tax profits hit 168 billion VND (8 million USD).

Vietinbank had 661 trillion VND (31.48 billion USD) in total assets and roughly 37 trillion VND (1.76 billion USD) at the end of last year.

In 2014, its pre-tax profits hit about 7.3 trillion VND (347.62 million USD), down 5.8 percent over the previous year. Outstanding loans grew 18 percent year-on-year to reach 542.68 trillion VND (25.84 billion USD).

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

VNA