Currently, Maritime Bank's charter capital is $373.8 million. — Photo baohaiquan

HA NOI (Biz Hub) — State Bank of Viet Nam (SBV) Governor Nguyen Van Binh last week approved in principle the merger of the Maritime Bank and the Mekong Development Bank (MDB).

The merger has created a new bank with a charter capital of VND11.75 trillion (US$549 million) and total assets of VND113 trillion ($5.28 billion).

The two banks had announced on their websites that the move was a result of a merger proposal submitted to the central bank by them last year.

Earlier, the merger plan was also approved at the banks' shareholders meeting last year, with the aim to boost the banks' financial strength and increase competitiveness.

The two banks expect the merger would help them be counted among the country's five largest banks in terms of charter capital. Currently, Maritime Bank's charter capital is VND8 trillion ($373.8 million), while the same for MDB is VND3.75 trillion ($175.23 million).

With nearly 300 transaction offices nationwide, it is also expected that the new bank will have an office network that is ranked the third among the country's commercial banks and that the State does not have a dominating share.

According to the Dau tu (Vietnam Investment Review) newspaper, the central bank also expects six bank mergers and acquisitions this year as part of an effort to clean up the banking sector in 2015.

The central bank stressed that the restructuring of banks would enhance and improve the banking system's performance and operations and bring Viet Nam's banking operations closer to international standards.

As per the move, Vietcombank could merge with the Saigon Bank for Industry and Trade, while Vietinbank might merge with OceanBank. Likewise, BIDV would probably do the same with the Mekong Housing Bank and Vietinbank could also merge with Petrolimex Bank.

Other banks that could also merge are Sacombank with Southern Bank, plans for which have been in the works since last year.

SBV, however, said details of the mergers were yet to be finalised and any mergers or acquisitions would be formally announced to the market when due.

Viet Nam currently has 42 local lenders, including many small banks, which are deemed to be overcrowded with many economists. Once the mergers and acquisitions take place, smaller and weaker banks could take advantage of the bigger and stronger banks' financial capability to resolve bad debts and liquidity. — VNS