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Shareholders approve Vietnam’s Sacombank merger despite worries

Shareholders approve Vietnam’s Sacombank merger despite worries

Wednesday, March 26, 2014, 19:06 GMT+7

Vietnamese lender Sacombank’s plan to merge with another local bank, Phuong Nam (Southern) Bank, received a unanimous approval from its shareholders on Tuesday during a meeting overshadowed by worries that the merger would increase the burden on rather than benefits for the bank.

The plan was overwhelmingly approved by 97.31 percent of shareholders, who insisted that Sacombank officials address their questions directly rather than responding later in documents, during a 30-minute meeting in Ho Chi Minh City, where both of the banks involved are headquartered.

“Why should Sacombank be merged with Phuong Nam Bank? How would Sacombank be following this merger?” questioned Le Thi Kim Cuc, who was among the first investors to buy Sacombank stocks.

In response, Kieu Huu Dung, newly-elected chairman of Sacombank, said the planned merger is a solution for the bank to boost its operation and network at a time of stiff competition.

“There are both advantages and disadvantages in all mergers,” Dung said.

“Research carried out by our board of management suggests that Phuong Nam is a suitable choice as it holds some similarities to our institution.”

The chairman concluded that the merger would help Sacombank “expand its operation and acquire a larger market share.”

But his reply just failed to satisfy shareholders, who continued to fire pressing questions at the Sacombank officials.

A shareholder said he disagreed with the officials, saying the merger “would only benefit Phuong Nam Bank while Sacombank would receive nothing but a new burden.”

“Sacombank would be able to develop further and stronger without the merger because it would not have to carry another bank on its shoulders,” he added.

Nguyen Thi Thin, a 64-year-old shareholder who bought stocks of both banks, had another concern.

“I spent VND500 million (US$23,585) to buy Phuong Nam shares but have not gained a single penny of dividends over the last years,” she complained.

“So would I be able to sell my stocks to recoup investment when the bank is merged with Sacombank?”

Chairman Dung replied that the meeting only sought to have shareholders accept in principle the merger plan, and it is a long road ahead for that to be realized.

The board of management has to carefully consider the merger plan which also has to pass many procedures at many different agencies to be actually implemented, he added.

“We think the merger would be beneficial to Sacombank and shareholders should feel assured and back this proposal,” he said.

Sacombank CEO Phan Huy Khang asserted in an interview with Tuoi Tre earlier this month that the merger would make Sacombank stand only behind Agribank, Vietcombank, VietinBank, and BIDV in terms of networks and total assets.

The brand name Phuong Nam Bank will no longer exist once it has merged with Sacombank but the latter name would be kept for the new bank, according to the CEO.

He added, however, that this change would not leave a huge impact on the operation of Phuong Nam Bank.

Despite all the concerns and worries, Sacombank shareholders voted in favor of the plan as well as all of the other reports and plans for the lender’s operations in 2014.

Further steps, which include developing a feasibility report for the plan and seeking permission from relevant agencies, will be implemented within this year, according to the Sacombank chairman.

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