Vietinbank, one of Vietnam's biggest lenders, is set to finish its merger with PGBank, controlled by state-owned fuel trader Petrolimex, after two years of planning, local media reported on Tuesday.
The deal is expected to be approved by the government next month and completed in September, news website Dau Tu cited Nguyen Van Thang, CEO of Vietinbank. He was speaking at a shareholder meeting the same day.
The merger will help Vietinbank expand its retail activities, Thang said, adding that the lender plans to continue to increase its presence and market share through mergers and acquisitions in the future.
Vietinbank expects its equity to be more than VND64.45 trillion (US$2.88 billion) after the merger, up 14.8 percent from the end of last year, while the chartered capital will increase 31.6 percent to around VND49.02 trillion ($2.19 billion).
According to a plan announced last year, the bank will issue 270 million shares to swap for 300 million shares of PGBank, one of Vietnam's smallest banks by chartered capital.
First announced in early 2014, the merger was one of many similar deals orchestrated by the central bank in an attempt to restructure the overcrowded banking sector that was blamed for dragging on the economy with bad debts in previous years.
Since 2011, 22 commercial banks and four finance companies have been merged in 12 deals, according to new figures released on the central bank's website. Another five mergers between five banks and five financial companies organizations approved by the central bank over the years are waiting for conclusion.
Vietnam now has 43 banks, including six wholly foreign owned. That number is expected to be reduced to 20-25 in the next two years, according to the central bank's plan.
The banking sector's bad debts were equivalent to 2.9 percent of total loans at the end of last year, compared to 3.7 percent estimated at the beginning of the year.