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Banking & Finance

SHB and VVF to merge

Released at: 19:50, 14/09/2016

SHB and VVF to merge

Central bank gives in principle approval to Saigon - Hanoi Bank merging with Vinaconex Viettel Finance Corporation.

by Hung Nguyen

Saigon - Hanoi Bank (SHB) and the Vinaconex Viettel Finance Corporation (VVF) have received in principle approval from the State Bank of Vietnam (SBV) to merge, with VVF to become a subsidiary consumer finance company of SHB.

SHB’s charter capital post-merger will be increased by VND1 trillion ($44.84 million) to VND10.48 trillion ($469.92 million).

SHB first announced plans to merge with VVF in October 2015 with share swap ratio of 1:1.

It is one of the largest caps on HNX and while VVF is on the UPCoM market transactions have been terminated.

VVF was founded in 2009 by major shareholders such as the Vietnam Construction and Import - Export Joint Stock Corporation (Vinaconex), Viettel, and major players in the banking and finance sector, including the BIDV Insurance Company. According to its 2015 financial statement, Vinaconex held 33 per cent and BIDV Insurance 5 per cent, while not mentioning the size of other holdings.

The representative of Viettel’s holding in VFF was removed from its Board of Management in 2015, according to the financial statement.

VVF has focused on restructuring since ceasing business activities in 2015 and 2016 as directed by the SBV “Due to the ongoing reform process, VFF’s Board of Management has not set any business targets for 2015, and accordingly there were no new business activities conducted and the company only focused on collecting and settling bad debts,” according to the financial statement.

VFF’s total assets in 2015 were VND1.08 trillion ($48.42 million), down 5.65 per cent against 2014 due to the bad debt handling process. The deposit/lending ratio to financial institutions increased 32.21 per cent, as the company ceased lending activities in 2015.

Outstanding credit in 2015 was down 30.03 per cent to VND146 billion ($6.54 million) from VND209 billion ($9.37 million) in 2014, due to the strategy of focusing on reform and selling bad debts.

Thanks to its bad debt settlement strategy, as at December 31, 2015, its total bad debts were VND42.44 billion ($9.37 million), down 71 per cent from December 31, 2014. Credit risk provisions were also down 58.08 per cent, from VND38.99 billion ($1.74 million) in 2014 to VND16.34 billion ($732,685) in 2015. 

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