PetroVietnam Finance will merge with Western Bank to form PVcombank, which will initially have $428.6 million in equity. — Photo vinacorp.vn

HA NOI (Biz Hub) ― PetroVietnam Finance Corp (PVFC) and Western Bank (WTB) have received an initial nod from the State Bank of Viet Nam on their proposed merger, announcing the news on Monday.

The two institutions will petition for official approval after putting the merger to a joint shareholder meeting, to be held in Ha Noi on September 8.

PVFC Chairman, Nguyen Dinh Lam, and WTB Chairman, Le Minh Tuan, said the two parties agreed the merger would enable stable and sustainable development in light of Government efforts to restructure the banking system by 2015.

"We have analysed each other's strength and weakness…and will establish a new credit institution that is capable enough to operate safely and effectively, and is able to provide banking-finance services for diversified areas in the economy," they said.

Meeting documents revealed the merger would be named Vietnam Public Bank or PVcombank, with an initial charter capital of VND9 trillion (US$428.6 million), equivalent to 900 million shares at VND10,000 ($0.47) each.

The new bank will command 30 branches, 67 transaction offices and four savings funds, with a total asset value of nearly VND100 trillion ($4.76 billion).

It is expected to expand equity to VND12 trillion ($571.4 million) and reach profits of VND1.24 trillion (approx US$59.05 million) by 2015.

Both parties said PVcombank would promote advantages in lending for the oil and gas sector, with outstanding loans amounting to VND16 trillion ($761.9 million) by the end of last year.

Meanwhile, experts predicted that PVcombank's profitability indicators, including its ROE (return on equity) and ROA (return on assets) ratios, would gradually improve over the next few years, but anticipated ROA would stay low while the bank restructured its investments and operations.

The new bank aims to achieve an average annual credit growth of 9 per cent within three years of the merger.

PVFC and WTB signed an in-principle agreement on the merger in April last year. ― VNS