Vietnam determined to reduce number of commercial banks

Vietnam will attempt to further reduce the number of commercial banks according to Vice Chairman of the NA Economic Committee, Nguyen Duc Kien.

Vietnam will attempt to further reduce the number of commercial banks according to Vice Chairman of the NA Economic Committee, Nguyen Duc Kien.

  

Many acquisitions and merger cases have been carried out in Vietnam

The banking system saw many acquisitions and merger cases from 2011 to 2015. For example, Dai A Bank merged into HDBank and Sacombank merged with Southern Bank. The State Bank of Vietnam took three ailing banks, Ocean Bank, GP Bank and Vietnam Construction Bank into public ownership. Vietnam currently has four state-owned banks and 31 commercial banks.

Kien said that restructuring of the banking sector with more acquisitions and mergers was intended for Vietnam to have several major banks in the South East Asia by 2021.

"They can negotiate and decide that a merger is not worth it or if the transactions don't necessarily represent market valuations. The point is the number of banks must be reduced and bankruptcy and closures are also solutions," he said.

Former deputy head of National Financial Supervisory Commission Le Xuan Nghia said many foreign investors showed interests in the local banks but it was not easy to reduce the number of banks. Banks themselves needed to want to buy or merge. Moreover, local investors don't have the finance, he said.

On the other hand, many ailing banks have become stronger in the past two years. Nghia suggested letting the banks grow stronger and they could attract investors naturally.

"The real estate sector has picked up and most bad debts are in property," he said.