PetroVietnam Finance will merge with Western Bank to form a new organisation which will develop both banking services and energy projects. ― Photo vir.com.vn

HA NOI (Biz Hub) ― A PetroVietnam Finance Corp (PVF)'s shareholder meeting on Saturday resolved that the company would merge with Western Bank to form a new organisation, which was expected to have an equity of VND9 trillion (US$428.6 million) and total asset value of VND100 trillion ($4.8 billion).

Western Bank's shareholders also approved the plan late last month, which was believed to help build an entity with adequate resources for developing banking services and major energy projects.

The two sides pledged to continue normal operations, maintain current business relations and assure the rights and interests of relevant organsations and individuals, including their customers, suppliers and agents.

PVF chairman Nguyen Dinh Lam told online newspaper VnExpress.net that the scheme was just waiting for the State Bank of Viet Nam's approval, adding that Western Bank's financial situation had been cleaned up although it had previously been exposed to significant bad debts.

Industry insiders said the greatest advantage of the merger bank would be the network since PVF, under the brand name of the oil and gas industry, had advantages in financing economic groups, while Western Bank had quite a large network in the Cuu Long (Mekong) Delta region.

After the merger, the 78 per cent stake which Viet Nam National Oil and Gas Group (PetroVietnam) was holding at its affiliate PVF would fall to 52 per cent at the new entity.

PetroVietnam general director Do Van Hau said the parent company would then sell more stakes to further reduce its equity in PVF following a capital withdrawal roadmap, but he affirmed that the group would continue to be "a firm stay" for the merger bank.

"We have over VND10 trillion ($476.2 million) deposited in a PVF account and don't have any plans to change this amount even after the merger," he said.

According to the law, PVF share listings would be terminated after the merger. The company's shares are currently being traded at around VND8,500 ($0.4) on the HCM City Stock Exchange.

The equity of the new bank corresponded to 900 million shares worth VND10,000 ($0.47) each and the possibility of listing these shares on the stock market was still under consideration, according to the PVF management board.

Non-banking financial corporation PVF had planned to become a banking institution for two years and merging with Western Bank was the easiest way for it to do so. For Western Bank, which had been facing liquidity troubles, merging with the PVF offered a means to save itself from bankruptcy, industry insiders said. ― VNS