October 29, 2012 / 5:06 AM / 5 years ago

Vietnam central bank approves third bank merger-state media

2 Min Read

HANOI, Oct 29 (Reuters) - The State Bank of Vietnam has approved the merger of two unlisted lenders, paving the way for the nation's third bank combination since the government started reforming the banking system in 2011, a state-run newspaper said on Monday.

Vietnam's banking system has been grappling with bad debt at 8.6 percent of total lending as of the end of March, the highest level in Southeast Asia, after years of over-exposure to the real estate sector and loose supervision of lenders.

The two unlisted banks, Ho Chi Minh City Development Bank or HD Bank, and Dai A Bank, neither of which has foreign strategic partners, will decide any merger-related issues on their own, the Dau Tu Chung Khoan newspaper said in an online report, quoting To Duy Lam, director of the central bank's branch in Ho Chi Minh City.

"Dai A Bank and HD Bank are both well-operating lenders and they are not among the nine banks forced to restructure by the government and the central bank," Lam was quoted as saying.

Senior officials of the two banks could not be reached for comment.

Ho Chi Minh City-based HD Bank has total assets of 50 trillion dong ($2.4 billion), while Dai A Bank, based in the southern province of Dong Nai, has assets worth an estimated 19.8 trillion dong, according to Thomson Reuters data.

The previous two mergers included one in late 2011 when three Ho Chi Minh City-based lenders were merged to form the Saigon Commercial Bank. The second was in August this year when Habubank was taken over by Saigon-Hanoi Bank after Habubank's non-performing loans hit more than 16 percent as a result of its support for state-run shipbuilder Vinashin and aquaproduct exporter Binh An Co.

$1=20,830 dong Reporting by Ngo Thi Ngoc Chau; Editing by Matt Driskill

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