A DaiABank shareholder meeting, held in Dong Nai on Wednesday. The meeting resolved the lender's merger into HDBank. — Photo vneconomy.vn

DONG NAI (Biz Hub) ― The merger of DaiABank (DAB) into the Ho Chi Minh City Development Bank (HDBank) was agreed after a DAB shareholder meeting was held in southern Dong Nai Province on Wednesday.

"As a small-scale bank with operations mainly locally focused, DAB faces many challenges in the market," said the lender's chairman Chu Viet Cuong. "We need to find the best way forward for the bank and shareholders and assure a future for our employees."

He said the merger would help both banks offer more advantages to customers and better meet the State Bank of Viet Nam's requirements on credit size, liquidity capability, capital adequacy and operation safety – all of which are getting stricter.

This was in line with Government efforts to restructure the banking system for a stable and sustainable economy, he added.

HDBank chairwoman Le Thi Bang Tam said in a statement that the move was natural in view of uncertain economic developments and harsher competition.

According to the banks, the merger institution will be among the top 10 commercial joint stock banks in Viet Nam, with an equity of over VND8.1 trillion (US$385.7 million) and a total asset value of around VND70 trilion ($3.33 billion). It will have over 210 transaction points and over 420,000 customers nation-wide.

It is expected to reach a total outstanding loan of over VND58 trillion ($2.76 billion) and a pre-tax profit of VND1.3 trillion ($61.9 million) by 2015. These are correlative to average annual growth rates of 24.8 per cent and 34.2 per cent, respectively.

It will be supported by strategic partners and shareholders who are involved in rubber, coffee, petroleum, industrial zones, property, resorts and aviation; while the retailing capacity will especially be enhanced in Ha Noi, Da Nang, HCM City and the east-southern region of the country.

HDBank management board members will be key leaders of the merger bank. Staff positions and customer rights will be kept intact, and every DAB share will be changed into a HDBank share, which had higher prices and liquidity on the stock market.

HDBank will issue 310 million additional shares, worth a combined VND3.1 trillion ($147.6 million), for the share conversion.

The merger bank will restructure debts to control non-performing loan ratios at below 3 per cent, and debts can also be sold to the Viet Nam Asset Management Company (VAMC). Bad debt ratios hit 2.94 per cent at HDBank and 6.8 per cent at DaiABank at the end of June.

A HDBank shareholder meeting discussing the merger will be held in HCM City on Saturday, and two banks will petition for State Bank approval for the share issuance and conversion in October, according to Tam.

Currently, HDBank has VND5 trillion ($238.1 million) and DaiABank has VND3.1 trillion in equities. Their official merger plans began in late 2012. ― VNS