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Central bank approves PGBank, HDBank merger
The Saigon Times Daily
Tuesday,  Sep 11, 2018,17:04 (GMT+7)

Central bank approves PGBank, HDBank merger

The Saigon Times Daily

An HDBank teller counts Vietnamese dong notes. The State Bank of Vietnam has given in-principle approval for the PG Bank-HDBank merger – PHOTO: HDBANK

HCMC – The State Bank of Vietnam has given in-principle approval for Petrolimex Group Commercial Joint Stock Bank (PGBank) to be merged into HCMC Development Joint Stock Commercial Bank (HDBank), reported the local media.

PGBank and HDBank are told to disclose their deal and assume the responsibilities of the credit institutions involved in the merger. Within two months, HDBank must submit a formal application to the central bank to approve the merger, based on prevailing regulations.

In late April, shareholders of HDBank approved a plan to acquire the Hanoi-based PGBank under a share-swapping deal. Each share of PGBank is expected to be converted into 0.621 HDBank share, while HDBank plans to issue 300 million new shares for the conversion. As of September 10, each share of HDBank was priced at VND37,000 (US$1.59).

The merger will enable HDBank to expand its client base, including with the State-run Vietnam National Petroleum Group (Petrolimex), which holds a controlling stake of 40% in PGBank and a 50% share of Vietnam’s retail fuel market.

With the receipt of the in-principle approval of the central bank, the share-swap deal for PGBank is expected to be completed by the end of this year.

Later, HDBank will raise its charter capital to more than VND15.3 trillion (US$659 million) and will own a network of nearly 370 branches and transaction centers.

HDBank also expects its pretax profit to reach VND4.6 trillion (US$202 million) and its returns on assets and on equity to be 1.3% and 21%, respectively.

Nguyen Thi Phuong Thao, vice chairwoman of HDBank, who is also the billionaire founder and chairwoman of Vietnamese budget carrier Vietjet Air, told her shareholders at the time that the lender had signed a 10-year strategic partnership with Petrolimex.

Accordingly, HDBank will be the main provider of financing for projects executed by Petrolimex and its subsidiaries. Petrolimex’s network spans roughly 2,500 filling stations and some 4,000 agents, serving more than 20 million individual consumers in Vietnam.

Approaching the group’s customers will let HDBank strengthen its financial ecosystem, ranging from fuel and gas consumers to passengers of Vietjet Air.

PGBank ranks among Vietnam’s smaller financial institutions facing difficulty meeting capital standards and competing against other lenders.

The Government asked Petrolimex to restructure PGBank and gradually divest from the lender. Petrolimex will have a 5.62% stake in the new entity, gradually shrinking its holdings to under 5%.

Earlier, PGBank proposed a merger with Vietnam Joint Stock Commercial Bank for Industry and Trade, or VietinBank, one of the four largest State-owned lenders in Vietnam. However, disagreements over benefits, growth prospects and shareholder interests halted the process, despite lengthy discussions.

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