SBV institutes new merger rules

Hanoi (VNA)- The State Bank of Vietnam (SBV) is consulting partners on regulations
regarding mergers and acquisitions of failing credit institutions.

The scheme was introduced into Vietnam , starting in July 1998, when the SBV
Governor signed a regulation stipulating the terms and methods of merger and
acquisition of joint-stock credit institutions; the scheme has since revealed
numerous problems.

The new draft regulation covers a wide-range of economic sectors, from State-run
to joint-stock, joint-venture and wholly foreign-invested, based on the Law on
Credit Institutions.

The bill defines two sorts of mergers, based on voluntary and compulsory
principles. The compulsory merger will apply to those creditors which are
operating inefficiently and are on the brink of bankruptcy, posing a threat to the
entire system, but are unwilling to register for a merger.

The Prime Minister is responsible for making a final decision in each case.

Banking experts say the new bill is expected to force creditors to make greater
efforts to improve their operations if they don't want to be forced into a
'compulsory merger.'

The SBV's latest report showed that nine commercial banks, with chartered capital
of nearly 1 trillion VND, have followed and succeed in their roadmaps for
additional investment.

The national credit market is now dominated by six State-run commercial banks, 38
joint-stock banks, 42 branches of foreign banks, five joint-venture banks and five
wholly foreign-invested banks.--Enditem