Vietnam's central bank will acquire all shares in a small, loss-making bank in Hanoi, a unit of Ocean Group Co, to ensure the banking system's safety, the second move in less than two months as it seeks to clean up the fragmented sector.
"The State Bank has announced its compulsory purchase of all the shares owned by existing shareholders in Dai Duong (Ocean) Commercial Bank," the State Bank of Vietnam said in a statement on Saturday.
The takeover came after serious financial losses at Dai Duong bank and is aimed at "preventing Dai Duong's weakness from spreading to other banks", the statement said.
Commercial banks in Vietnam reported bad debts at 3.49 percent of their outstanding loans in January 2015, up from 3.25 percent the previous month, a state-run newspaper quoted a central banker on Saturday as saying.
VietinBank, Vietnam's biggest partly private lender, has been appointed to join the management of Dai Duong Bank, the central bank said.
In January the central bank said it expected six to eight mergers and acquisitions in 2015 to strengthen the industry, laden with bad debts from real estate slump, unrestrained lending and costly investments by state-run firms.
The central bank has also said VietinBank may join Dai Duong Bank as part of the restructuring plan.
Dai Duong ranks the 20th among nearly 40 partly private lenders in Vietnam in terms of total assets. The bank had stopped publishing its financial reports from the third quarter of 2014 ended September.
In early February the central bank took over the loss-making Vietnam Construction Bank based in the Mekong Delta province of Long An and assigned Vietcombank, Vietnam's largest listed lender by market capitalisation, to join its management.
It has also allowed two mergers among domestic banks and one acquisition since early March.