Vietnam - Three banks merge, creditors feel anxious

by lexie Sun Dec 11, 2011 2:35 pm

December 10, 2011

Three banks merge, creditors feel anxious

How to handle with the debts incurred by Ficombank, TinNghia Bank and SCB is the question that has been raised after the information about the merging of the three banks was released.

The State Bank of Vietnam on December 6 officially announced the decision to merge the three banks, which all have the headquarters in HCM City. The sum of money the State Bank provided to help improve the liquidity of the banks will be handed over to the Bank for Investment and Development of Vietnam BIDV, which acts as the shareholder of the new bank to take shape from the three ones.

Creditors may become unwilling shareholders?

Some questions have been raised around the merging of FIcombank TInNghia Bank and SCB, including the one on dealing with the debt responsibility of the three credit institutions to depositors, to other credit institutions, and with the interests of existing shareholders.

Answering the question, Governor of the State Bank Nguyen Van Binh said that any credit institution borrows money to lend money. Therefore, the merging process will include the dealing with the duties left by the three banks, including the duty of paying debts in accordance with the laws.

Binh said that the central bank will instruct involved parties to restructure the debts between the banks and other banks, between the banks and clients.

Thoi bao Kinh te Vietnam has quoted its sources as saying that the handling with the debts of FIcombank TInNghia Bank and SCB (the banks borrowed money on the interbank market) has caused a headache to some bankers.

A banker in Hanoi said that the three banks are owing 864 billion dong to his bank. SCB owes 394 billion dong, FIcombank 70 billion dong and TInNghia Bank 400 billion dong.

A manager of another joint stock bank said that he also lend one of the three banks a big sum of money, but he still cannot take back the loan.

In fact, the creditors do not fear that they cannot take back the loans, but they fear that they cannot get the money back quickly. The loans on the interbank market are mostly overnight or short term loans. Meanwhile, it will take at least three years to compete the merging, while the handling with debts always need a long time. Under the current regulations, auditing will be necessary to define the sums of debts, while invoices and bills will also need checking.

Therefore, if the State Bank does not set up a specific mechanism to settle the debts of the three banks, creditors will not be able to take back money soon, which will badly affect their liquidity

Manager of a joint stock bank said that creditors – banks will take more drastic measures in some more days to ask for debts back. This will lead to the fact that banks will find it more difficult to borrow money on the interbank market

According to Binh, the State Bank has submitted to the Government the plan to restructure the banking system.

Under the plan, from now to the end of 2012, the State Bank will have to classify banks based on the actual operation of the banks. The decision to merge three banks is the first move taken by the central bank in the process of restructuring banks.

Binh said that the three banks have decided to spontaneously merge into each other, and the move has been applauded by the central bank which says that the move will allow them to turn into a powerful bank.

http://www.vietfinancenews.com/2011/12/three-banks-merge-creditors-feel.html#more