Vietnam considers major bank mergers in 2015: central bank

More than six to eight major banks in Vietnam would likely merge with each other in 2015 in an effort to strengthen the industry, according to sources with the State Bank of Vietnam, or the central bank.

The Joint Stock Commercial Bank for Foreign Trade of Vietnam, the country's biggest bank by market value, could merge with unlisted Saigon Bank for Industry and Trade, while the Hanoi-based Joint Stock Commercial Bank for Industry and Trade (VietinBank) may join with unlisted OceanBank, local Tuoi Tre (Youth) daily reported on Tuesday, quoting central bank sources.

The Bank for Investment and Development of Vietnam could take similar steps with the Mekong Housing Bank, and VietinBank could also merge with the Petrolimex Bank.

Other mergers would include the Maritime Bank with the Mekong Development Bank, and the Sacombank with the Southern Bank, for which preparations began in 2014.

Vietnam is trying to clean up its finance sector which has 42 local banks, many of which are burdened with non-performing loans after a decade of rapid expansion, and many economists consider the sector as overcrowded, with too many small and under- capitalized operators, said the report.

According to Do Thien Anh Tuan, an economist at the Fulbright Economics Teaching Program in Ho Chi Minh City, the positive side of these mergers is it uses big banks to force restructuring in small lenders and takes advantage of the financial capability of the big banks to support liquidity.

Vietnamese banks' non-performing loans were 3.87 percent of total loans as of October 2014, which is scheduled to reduce to 3 percent by the end of 2015, according to the central bank. Endi