An unprecedented merger will leverage Lien Viet Cimmercial Joint Stock Bank into one of the most heavyweight retail banking service providers in Vietnam. Lien Viet, reportedly one of the most profit-making banks in Vietnam and Vietnam Post Savings Services Company (VPSC), an affiliate of the state-owned Vietnam Post Corporation (VNPost), are making [mal touches to a merger deal.
The deal, which will make VNPost a major stakeholder in Lien Viet, means the private domestic bank could make use of the latter's 13,000 post offices at thousands of communes as transaction offices.
Thanks to this cost -saving move, Lien Viet will then lead the pack in terms of a retail banking service infrastructure network. The bank currently has only 28 branches and transaction offices.
In Vietnam, state-owned Agribank boasts the largest number of branches and transaction offices, at 2,230. Techcombank has more than 200.
Nguyen Due Huong, vice chair of Lien Viet's board of directors, said the deal reflected LienViet's desire to become a leading retail bank in Vietnam. "The deal has received the prime minister's in principle thumb-up," he told VIR.
The evaluation of VPSC, which will determine VNPost's stake in Lien Viet, is expected to be completed in May this year.
A Lien Viet source estimated the merger would help Lien Viet raise its chartered capital by an additional four trillion dong ($210 million) from 3,650 billion dong. "The deal will leverage Lien Viet's retail service outreach across Vietnam, including rural areas, such as micro-finance, savings and retail lending," he said.
According to the source, VPSC's total asset value was around 10 trillion dong ($526 million), while Lien Viet's asset value recorded at the end of last year was 17,834 billion dong ($938 million).
Lien Viet will issue one-year term convertible 100,000 dong bonds worth two trillion dong ($105 million) on April 1, 2010 with annual yield of 7%. The bonds will be converted into shares at the due date with the ratio of 1:10. Lien Viet plans to muscle up its strength as a multi-sector economic group with banking as its core business.
Huong said the bank wished to list on the local stock market as soon as possible. However, he said, the bank was established two years ago, while the current governmental rules require companies must have operated for at least five years before listing.