Vietnam’s central bank directed two leading commercial banks to take over underperforming rivals on Friday, as part of a drive to restructure the banking system and tackle bad debt that it said was necessary for political stability and social order.
Vietnam Prosperity Joint Stock Commercial Bank (VPBank) will take over GPBank, and Ho Chi Minh City Development Bank (HDBank) will take over DongA Bank, the State Bank of Vietnam said in a statement.
“The compulsory transfer of weak credit institutions is one of the solutions to contribute to ensuring macroeconomic stability, national financial and monetary security, political stability and social order and safety,” the central bank said.
In 2023, the central bank had said it planned to restructure four poorly-performing banks, including via forced takeovers by established lenders. Two takeovers were done last year.
HDBank said its takeover of DongA would enable it to expand operations, boost lending and develop new business models. In a statement, HDBank said it would receive support from the central bank to ensure the takeover is effective.
“HDBank will focus its resources and restructuring experience to accompany and support DongA Bank in consolidating its operations and overcoming existing problems, aiming to build DongA Bank into a bank with healthy, safe and sustainable finances,” it said.
VPBank said it would contribute up to 20% of its charter capital to help state-owned GPBank, and once the transfer was completed it could retain GPBank as a subsidiary or sell it.
The aim of the mandated takeover was “gradually improving GPBank‘s normal operations, addressing its weaknesses and transforming GPBank into a healthy and continuously operational entity”, VPBank said in a statement. Last year, Vietcombank VCB.HM and Military Commercial Joint Stock Bank MBB.HM took over smaller lenders Construction Bank and Ocean Bank, respectively, as part of the restructuring drive.
The SBV has also had Saigon Joint Stock Commercial Bank, better known as SCB, under special supervision since October 2022.
Last year the central bank mounted an unprecedented rescue of SCB after it became embroiled in the country’s biggest financial fraud. Reuters reported in April the SBV had pumped in $24 billion in “special loans” to prevent its collapse.
Reuters
