Hanoi Housing Development Commercial Joint Stock Bank (Habubank-HBB) has recently officially sent the shareholders its plan to merge with Saigon-Hanoi Commercial Joint Stock Bank (coded SHB). Thus, the draft merger plan between HBB and SHB has been officially disclosed together with relative details on merger plan, analyses for reasons, challenges, opportunities and prospect when the merger is successful, the local newswire VnEconomy reported.
According to the merger plan, after the merger with SHB, HBB’s shareholders will be swap shares at the ratio of 1:0.75 or one HBB share for 0.75 SHB share.
The to be merged bank will be named as Saigon-Hanoi Joint Stock Commercial Bank (SHB) and will have a chartered capital of 8.866 trillion dong, equalling to 886.6 million shares and would be headquartered at No 77 Tran Hung Dao, Hoan Kiem, Hanoi.
It is expected that by 2014, the total deposits would reach 130.487 trillion dong, total outstanding loans at 78.188 trillion dong and bad debts ratio at 2.4 percent.
The reason for this merger was blamed for the loans from the group of customers of Vietnam Shipbuilding Industry Group (Vinashin), which has greatly affected the bank’s business efficiency, especially with the increasing costs of capital; as a result, financial results and asset quality from 2011 so far have been reduced considerably.
With such situation, the bank requires immediate active measures to address this situation effectively. One of the most positive solutions is to perform the restructuring plan of operations in a comprehensive manner through the merger with other credit institutions, which is also consistent with the policy and orientation of the State Bank of Vietnam (SBV).
Another important reason is Habubank’s lack of ambitious enough expansion and business development plans in the past. Therefore, Habubank did not have strong competition as the market faced crisis and did not have good adaptation when the situations had unfavourable signs to the market and traditional products of the bank.
According Habubank, with the current scale and capacity, the bank will face many difficulties in market development and may disadvantage during the competition when its competitors are stepping up merger and consolidation.
In addition, Habubank is now also under the pressure to restructure to heighten the financial capacity, improve operational efficiency, growth in size and market share according to the general policy of the banking sector.
The annual general meeting (AGM) 2012 of HBB will be taken place on April 28 at the International Conference Centre, No 11 Le Hong Phong Ba Dinh, Hanoi.