Vietnam ‘basically completes’ value assessment of weak banks pending forced takeover

The State Bank of Vietnam (SBV) has “basically completed” the “unprecedented” task of assessing the value of ailing banks subject to forced takeovers, said Governor Nguyen Thi Hong.

The assessments will lay the foundation for completion of takeover plans in the time to come, the central bank governor said at a banking conference Monday, without mentioning a specific timeframe.

The SBV has received a greenlight for the compulsory transfer of four ailing lenders – CBBank, OceanBank, GPBank and DongABank – that have been placed under special surveillance to prevent contagion risks. The first three were nationalized in 2015.

In October 2022, Saigon Commercial Bank, or SCB, was also placed under special surveillance after a bank run triggered by the arrest of tycoon Truong My Lan, who allegedly controlled more than 90% of its charter capital. It closed 39 branches and transaction offices nationwide last year.

Speaking at the Monday conference, Le Trung Thai, chairman of military-run MBBank, which is among those tasked with acquiring a weak lender, said that his bank has helped the target partner improve its operations and reduce its cumulative loss.

MBBank has finalized an acquisition proposal and expects to get the government approval this quarter, Thai said.

Under the plan, MBBank will receive funding from the SBV at zero cost. If it fails, MBBank will not be allowed to “return” the target bank, but it can sell the latter or turn it into a joint stock bank. If successful, the target bank can be merged into MBBank.

The government has repeatedly requested the SBV to speed up the handling of weak banks. In November, Deputy Prime Minister Le Minh Khai was tasked with directing the SBV and the Commission for the Management of State Capital at Enterprises to finish the handling of at least two to three weak banks and industrial projects by the end of 2023.

A recent report by the Ministry of Planning and Investment indicated that the SBV was considering proposals by a number of investors to join the restructuring of SCB.