PetroVietnam Finance silent on Western Bank merger buzz

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Local media reported last week that PetroVietnam Finance Corporation (PVFC), a unit of PetroVietnam Oil and Gas Group, may merge with Western Bank, saying the two sides continued their negotiations.

Representatives from PVFC, a non-banking financial institution, said the company has not issued any official announcement about the merger without disconfirming the recent rumors, according to a VnEconomy report on Saturday.

Nguyen Thien Bao, PVFC's director general, told local media in late April that the company planned to convert from a financial company into a commercial bank.

Merging with Western Bank would allow PVFC to upgrade its operation and take advantage of its new partner's experience and retail banking network, as PVFC only currently issues loans and helps arrange investments for local companies, mostly PetroVietnam, according to VnExpress.

PetroVietnam said in a July press conference it was seeking the government's permission to reduce its current stake in PVFC from 78 percent to 20 percent, news website VnEconomy reported.

Fiachra Mac Cana, managing director of Research Department of Ho Chi Minh Securities Corporation, said the merger would help PVFC become more financially independent even after PetroVietnam divests its shares.

He added that the merger may take place no sooner than in the fourth quarter of 2012.

The central bank issued a circular in June about the restructuring of credit companies, and said it would approve the merger of financial institutions and commercial banks.

PVFC plans to increase its charter capital by 50 percent up to VND9 trillion in 2012, according to VnExpress.

PVFC's net profit in the first half of 2012 reached VND202 billion. As of June 30, two state-owned companies, Vinashin and Vinalines, still owed PVFC more than $100 million.

Western Bank's charter capital is VND3 trillion.

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