Ailing banks seek strategic partners for restructuring

VietNamNet Bridge Ailing and merged banks are looking for strategic shareholders to help them restructure and deal with bad debts.

Sai Gon Commercial Bank (SCB), a merged bank that combines the former Sai Gon Commercial Bank, TinNghia Bank and Ficombank, is currently restructuring under supervision from the State Bank of Viet Nam.

The bank has recently ratified plans to increase its charter capital by issuing 300 million shares worth VND3 trillion (US$142 million). Besides paying the SBV's recapitalisation loan of VND1 trillion ($47.6 million), the bank said it would use an additional VND200 billion to modernise its information technology system. Another VND1.8 trillion will be added to the bank's business capital.

Only 30 million shares will be issued to executive boards and supervisors and existing large shareholders, both individuals and organisations. The rest of the 270 million shares, worth VND2.7 trillion, will be sold to outside investors from foreign organisations in June.

Many other commercial banks also plan to acquire outside shareholders to take part in their restructuring efforts.

TrustBank, for example, has gotten permission from the SBV to call for the strategic domestic shareholders with the most shares in the company to take part in its restructuring.

The SBV is also examining Navibank's restructuring proposal before submitting it to the Government, said Nguyen Hoang Minh, deputy director of the SBV's HCM City branch.

Experts agreed that seeking strategic partners is the best way for ailing banks to satisfy the interests of existing shareholders.

Deputy director of the Central Institute of Economic Management Vo Tri Thanh said that commercial banks were trying to seek strategic shareholders to improve their financial status to a point where they could engage in restructuring, as the Government had so far taken bold measures to deal with ailing banks.

SBV governor Nguyen Van Binh has said if ailing banks cannot restructure on their own, the SBV would consider merging them before requiring them to reduce charter capital to address bad debts.

However, experts warned that as bank shares were not very attractive to domestic investors and State-run groups must withdraw capital from the banking industry, it would not be easy for ailing banks to find strategic partners in the domestic arena. However, the banks can still expect foreign investors, who are interested in Viet Nam's banking industry and have long-term investment strategies, to get involved