Eximbank, Sacombank eye merger in next 3-5yrs

The deal will be materialized with a cooperation agreement expected to be signed between the two parties on Tuesday evening, according to a press release from Eximbank.

Eximbank and Sacombank are the second and fifth largest commercial banks in Vietnam in terms of assets with VND160 trillion ($7.68 billion) and VND147 trillion ($7 billion) as of the end of Q3/2012.

Eximbank and Sacombank have a charter capital of VND12.355 trillion and VND 10.74 trillion, respectively.

Eximbank is now a major shareholder of Sacombank with 9.73 per cent.

With the merger, the new bank may be the biggest commercial bank in Vietnam with over VND307 trillion in assets, overshadowing Asia Commercial Joint Stock Bank with VND255.87 trillion.

Meanwhile, it may become the fifth largest Vietnamese financial institution in terms of assets after Agribank (VND561.25 trillion), BIDV (VND44.63 trillion), Vietinbank (VND4.4.87 trillion) and Vietcombank (VND391.66 trillion).

In the meantime, the two banks will cooperate in the implementation of some financial services including offering co-financing and entrusted loans.

The two banks will also offer the credit limit on the interbank market to support each other in the optimization of their capital flows, and timely support for liquidity needs.

The credit limit, the term and interest rate policies will be flexibly applied to adapt to the actual conditions of each party in each period.

At the same time, the two sides will support each other in foreign exchange and gold trading in order to meet the customer’s needs under the provisions of the State Bank of Vietnam.

On the local stock market, EIB shares of Eximbank saw increasing transactions on Tuesday afternoon after the merger news leakage with 8.86 million shares traded, more than double the previous session. Foreign investors bought some 800,000 EIB shares.

In total, some 9.3 million EIB shares worth VND162 billion were traded on Tuesday. Its price rose 3 per cent day on day to VND17,400.

STB shares were in the same boat with over 1 million shares worth VND25.3 billion traded on the same day. Its price inched up 0.9 per cent day on day to VND23,000.

In early November last year, Sacombank’s board chairman Pham Huu Phu, who was former Deputy Chairman of Eximbank, told local press a plan for a possible merger.

At the Annual General Meeting of Shareholders of Sacombank in May 2012, Le Hung Dung, Chairman of Eximbank’s board of directors, mentioned the possibility of merging with another bank and said it would consider an appropriate time.

But he at the time refused to give the name of the potential partner.

The idea on the merger emerged for the first time in July 2011 when Eximbank decided to buy back 9.73 per cent stake of Sacombank from ANZ at VND16,000 per share, VND4,000 pricier than market rates.

Tram Trong Ngan, vice chairman of Sacombank’s board, has registered to offload 30 million STB shares, or 3.09 per cent stake, to reduce his holdings to 18 million shares, equivalent to 1.84 per cent stake of the bank.

The transaction is expected to be implemented from February 1 to March.

Ngan took the same move on December 17 with an aim to offload 48 million STB shares early this month, but failed.