Three Vietnamese banks plan to merge to bolster their liquidity and cut costs as a single entity, the country's central bank said.
First Commercial Joint-Stock Bank, Tin Nghia Commercial Joint-Stock Bank and Saigon Commercial Joint-Stock Bank, which are all unlisted and privately owned, will combine voluntarily at an unspecified date, Governor Nguyen Van Binh said.
"The best interests of depositors in the banks are assured as the central bank has supported their liquidity and the new bank will also have state participation," Binh said in a statement posted on the central bank's website Tuesday.
Binh is promoting bank mergers to strengthen a financial sector that is challenged by funding constraints, rising bad loans, and inflation around 20 percent. The State Bank of Vietnam wants 15 "big" lenders by 2015 that make up about 80 percent of the local market, he told lawmakers last month.
"It's clear that they have to reinforce their banking sector -- increase the strength and size of the banks," said Jean-Jacques Bouflet, head of trade and economic affairs at the Delegation of the European Union to Vietnam. Foreign banks should "participate also in the strengthening of the sector. A purely national, inward solution will not be enough," he said.
The state-run Bank for Investment and Development of Vietnam, the country's third-largest lender by assets, will help the three banks complete the merger, according to today's statement. The lender known as BIDV will also represent the government's stake in the new entity, and the central bank will consider the size of its holding, the statement said.