HDBank in compulsory takeover of weak bank mandated by Govt

August 25, 2022 - 12:54
For its rich experience in successful restructuring of credit institutions and pioneering spirit, HDBank has been chosen to participate in the compulsory sale of weak credit institutions. 


Customers at an HDBank transaction office in HCM City. For its rich experience in successful restructuring of credit institutions and pioneering spirit, HDBank has been chosen to participate in the compulsory sale of weak credit institutions. — Photo courtesy of HDBank

HCM CITY — For its rich experience in successful restructuring of credit institutions and pioneering spirit, HDBank has been chosen to participate in the compulsory sale of weak credit institutions. 

HDBank's shareholders have voted in large numbers in favour of all the proposals made by the board of directors, including participation in the restructuring of a credit institution in the form of compulsory sale of a specially-controlled joint stock commercial bank, which received approval from 81.52 per cent of voting shareholders.

According to the proposal, the participation in the restructuring of a credit institution aims to "implement the direction of the Government and the State Bank of Việt Nam on restructuring the system of credit institutions, contributing to the healthy and stable development of the banking system and economy, besides creating opportunities to bring benefits and added value to HDBank and its shareholders.”

Addressing the bank’s investor conference recently, Phạm Quốc Thanh, the bank’s CEO, said: “Not many credit institutions have been selected by authorities to participate in this programme. This reflects their trust in HDBank’s capacity and experience in successfully restructuring financial institutions, and their appreciation for the restructuring plan HDBank has prepared for this mission.” 

In the banking industry, HDBank is known for successfully implementing two mega acquisitions, one involving merger of a joint stock bank and the other, acquisition of a financial company.

In 2013 HDBank merged with Đại Á Bank and completed the process of connecting and merging their information technology systems in a record time of four months while also ensuring safe and smooth transactions for all customers, and creating a better earning and working environment for employees.

Also in 2013 HDBank became the first domestic financial institution to acquire a fully foreign-owned financial institution, Societe Viet Finance, a subsidiary of France’s Societe Generale banking group, the predecessor of HD SAISON Financial Co. Ltd.

These ushered in a decade of high and sustained growth for HDBank, bringing great value to its customers, shareholders, partners, and employees.

At the same time, the merger with Đại Á Bank contributed to the development of the banking system as it encouraged more M&A deals in the banking sector, helping reduce the number of banks with small capital and limitations in various aspects and make the financial and banking sector gradually healthier and more stable and efficient.

By participating in the credit institution restructuring programme, HDBank once again demonstrated its pioneering spirit and willingness to fulfill tasks assigned by the Government and the SBV.

HDBank and the banks that are mandatorily sold will receive support prescribed in the Law on Credit Institutions and other relevant legal regulations. 

After the compulsory sale, the bank will operate as a one-member limited liability bank, remaining independent of HDBank. 

The financial statements of the bank will not be consolidated.

According to the regulations on compulsory sale, HDBank is entitled to exclude the bank’s figures when calculating capital adequacy ratio.

The funds HDBank transfers to the bank is exempt from marking to market and excluded when calculating its limits on capital contribution and equity investment.

HDBank will assist the compulsorily sold bank in governance, administration, technology infrastructure support, risk management, and other areas.

HDBank’s dividend and profit distribution and funds are unaffected by the compulsory acquisition and separated from the business results of the other bank during the implementation of the mandatory sale.

HDBank's board of directors believes that by undertaking the compulsory sold bank, HDBank not only fulfills its responsibilities towards the banking industry by leveraging its competence and experiences in bank restructuring, but also captures the opportunities to achieve a breakthrough in its growth.

In particular, the preferential policy in granting an annual credit growth limit will help HDBank achieve breakthrough growth, gaining more market share and becoming one of the leading banks in the market in the next five years.

According to a recent report by SSI analysts, this compulsory acquisition has positive long-term implications for HDBank. Meanwhile, international investors received this news with excitement and decided to increase their investment in HDBank. 

In the first half of the year HDBank continued to maintain high growth in terms of both scale and quality, with profit before tax going up by 26.5 per cent over the same period last year to 54 per cent of the full-year target. Its non-performing loans ratio remained at the lowest level in the industry.

This month HDBank was named in the leading group of joint stock commercial banks in Việt Nam and  the leading group of reputable and effective listed companies. 

HDBank is also the only bank in Việt Nam to be recognised as one of the ‘Best Companies to Work for in Việt Nam’ by HR Asia Magazine for five consecutive years.

In 2021 HDBank won the Global Brand Awards for Best Bank and Best Digital Transformation Bank in Vietnam. 

It was also conferred a certificate of merit by the Prime Minister for its contributions to the prevention and fight against the COVID-19 pandemic. VNS