Bad debts to shrink after Habubank merger

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The merger of troubled lender Habubank with Saigon-Hanoi Commercial Joint Stock Bank will help bring down the former's bad debt ratio but liquidity will remain a problem, an official said.

Bad debts at Habubank reached 16.06 percent of total loans at the end of February, but the ratio is expected to fall to 12.88 percent after the merger, news website VnExpress reported Saturday, citing Saigon-Hanoi Bank General Director Nguyen Van Le.

However, Le said the post-merger bank will have to face a cumulative loss of VND1.8 trillion (US$87.9 million) and liquidity continues to be under strain.

Shareholders of Saigon-Hanoi Bank, or SHB, voted for the merger on Saturday, a week after Habubank shareholders agreed on the same plan. Habubank officials said the asset quality of the lender had deteriorated since 2011. Its bad debts included a VND3 trillion ($144 million) loan to state-owned shipbuilder Vinashin, which almost collapsed in 2010.

The new bank, which is expected to take the name of SHB, will have a combined registered capital of nearly VND9 trillion ($432.5 million) and total assets worth more than VND100 trillion.

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