Sacombank is working on a plan to acquire Southernbank , the former's general director Phan Huy Khang has told news website VnExpress.
Following the takeover, Sacombank is expected to become Vietnam’s fifth-largest lender by assets behind the four state-owned giants Agribank, BIDV, Vietcombank, and Vietinbank.
Its chartered capital would rise to VND16.5 trillion (US$783.75 million), and total assets to almost VND240 trillion ($11.4 billion). Sacombank now has assets of more than VND160 trillion.
But the two are still in the early stages of preparations and would have to obtain permission from the State Bank of Vietnam after getting approval from their respective shareholders, Khang said.
The Sacombank management saw Southernbank as a good takeover prospect because of their operational synergies, he said.
Southernbank, whose bad debts increased by a quarter to VND1.32 trillion at the end of the third quarter last year -- with nearly 60 percent of them classified in the lowest category -- found it “infeasible” to restructure on its own and sought a takeover by Sacombank.
The banking system, stymied by high levels of non-performing loans and cross ownership, has been going through a shake-out since 2011 with the central bank ordering takeovers of weak banks and restructuring.
Some banks have also voluntarily done so to improve their health.
The market saw the merger of PetroVietnam Finance Corp and Westernbank last September and a takeover of Habubank by SHB a year earlier.
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