Petrolimex Group Commercial Bank, or PGBank, will be merged into Vietnam’s second largest bank by assets, Vietinbank, via share swap. Both banks organised their shareholder meeting on Tuesday to announce the merger scheme.
Specifically, 270 million shares of Vietinbank will be allocated to PGBank shareholders in exchange for 300 PGBank shares.
“Merging with PGBank is consistent with the State Bank of Vietnam’s direction. It will help us grow as one of Vietnam’s largest lenders,” Vietinbank executives said during the meeting.
Meanwhile, PGBank CEO Nguyen Quang Dinh noted: “The merger will not be merely executed between Vietinbank and PGBank. The Vietnam National Petrol Group (Petrolimex) will also participate in the process.”
The general director indicated that Petrolimex, a strategic shareholder with a 40 per cent stake in PGBank, will have a more active role to play, post merger. “I hope that with this partnership, the potentials of all parties will be effectively tapped,” Dinh said.
Post merger, Vietinbank’s total asset will increase by VND25.8 trillion ($1.2 billion), while its charter capital will increase by VND3 trillion to more than VND40 trillion ($1.86 billion).
VietinBank will be able to tap the financial retail network established through the network of Petrolimex’s 6,600 petrol stations outlets across the country.
The acquirer expects to gain 15 million more customers after the merger.
Vietinbank revealed that the merger contract between the two lenders, advised by international auditing firm Deloitte and law firm Mayer Brown JSM, was completed in the first quarter, and the Vietnamese central bank will examine and approve in June.
Vietinbank’s senior executives will remain the same, while leaders of the targeted lender, including the board of directors and the supervisory board, will resign as the merger is finalised.
As agreed by the two entities, the bank post merger will set up a VND1 trillion ($46.5 million) financial company, probably named PG Finance, with Vietinbank being the largest investor.
Vietinbank reported a gross profit of more than VND7.3 trillion ($339.5 million) in 2014, a decline of 5.8 per cent over the previous year. It targets to retain stable profit this year, while increasing charter capital to VND49 trillion ($2.3 billion) after the merger.
In addition, the lender will list 2.4 billion additional shares, which belong to the state ownership. Its total outstanding shares are 3.72 billion, of which, 1.3 billion units are being listed on the Ho Chi Minh City Stock Exchange.
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Vietinbank also affirmed, Tuesday, that it is merging only with PGBank adding that its involvement in OceanBank is purely the arrangement of the Central Bank in terms of human resource.
Last year, PGBank earned a modest profit of VND168 billion ($7.8 million) and targets a growth of five per cent for this year.
Within the next two weeks, two other banks will be organising their shareholder meetings, the Bank for Investment and Development of Vietnam (BIDV) and Mekong Housing Bank on April 17; and Vietcombank and Saigon Bank on April 24. All of these lenders have already revealed their merger plans. However, the details have not been published.