Shareholders of HCMC Development Commercial Bank (HDBank) during the extraordinary shareholder meeting last Saturday approved the plan to merge with Dai A Commercial Bank (DaiABank) at the share swap ratio of 1:1.
The approval came after the bank’s management persuaded investors of long-term benefits. Earlier in the shareholders meeting, many investors protested the swap ratio, saying the HDBank share should be priced higher than that of DaiABank.
Addressing concerns over disadvantages the ratio may bring to shareholders, Le Thi Bang Tam, chairwoman of HDBank, said that medium and long-term benefits are the key factor of the merge deal. By merging with DaiABank, HDBank will take advantage of transaction and customer network of DaiABank to facilitate its development strategy.
With the network of DaiABank merged into HDBank’s system, the consolidated bank will become one of 10 biggest banks in the country. Meanwhile, it is difficult to obtain a license to open a branch now, Tam said.
To expand operation scale, there are only two ways, merging with another bank and issuing additional shares. The latter way seems to be challenging given the sluggish situation of the stock market, Tam added.
DaiABank has 65 transaction points in Vietnam while it is operating strongly in the southeastern region. Therefore, the consolidated bank will have a network of 52 branches, 135 transaction offices and 23 saving funds.
Nguyen Van Dung, deputy director of the central bank’s HCMC branch, also asserted that the new HDBank will be one of the 10 biggest banks in the country.
Nguyen Ngoc Dang, general director of HDBank, said that HDBank has set up plans to deal with bad debts of DaiABank, which accounts for 6.8% of total outstanding loans of the bank. Specifically, HDBank has considered four solutions, including establishment of a steering committee for mortgaged asset handling, selling a part of bad debts to Vietnam Asset Management Company (VAMC), or converting debts into capital contributions.
The new bank will bear the HDBank brand with a chartered capital of VND8.1 trillion. All DaiABank employees and their wages will be maintained after the merger deal.
All merging procedures between the two banks will be finished in December.
Earlier, HDBank has acquired 100% equity of Socíeté Générale Viet Finance. After getting approval from the central bank in October, the financial firm will become a subsidiary of HDBank.