An OceanBank transaction office. The State Bank of Viet Nam has announced the takeover of this bank. — Photo vnexpress.net

HA NOI (Biz Hub) — The State Bank of Viet Nam (SBV) announced the takeover of the Ocean Commercial Joint Stock Bank (OceanBank) on April 25.

The SBV said in an online statement that it would acquire all equity of OceanBank, which had shown "fragile operations with serious mismanagement".

During a period when it was under special supervision of the authorities, this lender could neither handle "heavy financial damages", nor present feasible measures to ensure adequate charter capital, as required by the central bank.

The compulsory acquisition was needed to restructure and restore the payment ability of OceanBank, and prevent its weakness from impacting other credit institutions. This takeover will terminate all rights and interests, as well as the status of existing shareholders at the bank.

The SBV asked the Viet Nam Bank for Industry and Trade (VietinBank) to participate in the management of OceanBank, affirming that all legal rights and interests of the depositors would be guaranteed.

SBV officials reportedly said at an OceanBank shareholders' meeting and a Government press conference on April 25 that the stakes would be transferred at a price of zero dong per share, similar to what was done with the Viet Nam Construction Bank (VNCB) in March.

Explaining why the authorities did not let these banks go bankrupt, SBV Governor Nguyen Van Binh told the local press that letting banks fail was not suitable to the practices in Viet Nam at present.

"With the current domestic situation, any bank bankruptcy will be a sensitive issue, which may significantly affect the economy and the national financial system. It may lead to massive money withdrawal and cause a systematic collapse of credit institutions," he said.

In the meantime, mergers and acquisitions have been stimulated for the sector to ensure economic stability and social security, he added.

Former Governor of SBV Cao Sy Kiem said the central bank had to be cautious in nationalising commercial banks. "Such nationalisation is quite a costly measure as the finances to handle bad debts and pay money to depositors will be sizeable.

"The expenses for other banks assigned to assist the SBV in this process will also be great."

There was no presentation of OceanBank's business performance report at last week's shareholders meeting. After VNCB, OceanBank is the second credit institution to be taken over by the SBV. — VNS