Headquarters of the State Bank of Vietnam in Hanoi (Photo: VNA)

Under a recently released draft circular, the SBV proposes that any merger and consolidation of credit institutions must meet several principles.

First, the merger and consolidation of credit institutions is required to comply with the agreements of related parties and ensure the normal operation of the credit institutions.

In addition, the legitimate rights and interests of customers and creditors must be assured during the merger and consolidation process, which must also comply with relevant legal provisions.

Information confidential before the approved merger and consolidation projects is required to ensure the stable operation of the credit institutions participating in the merger and consolidation. The merger and consolidation must also ensure the principles of prudence, honesty, accuracy and no misunderstanding of documents and records.

Under the merger and consolidation of credit institutions, the dissipation of assets in any form is strictly prohibited. The transfer and sale of assets during the merger and consolidation process must ensure publicity, transparency, compliance with the provisions of law and the agreements of the related parties, the safety of assets and not affect the rights of the credit institutions and related individuals.

According to the draft circular, the credit institutions participating in the merger and consolidation must not belong to the prohibited economic concentration cases, except for cases exempted from the prohibited economic concentration according to the Law on Competition. The institutions must also have merger and consolidation projects in accordance with regulations approved by the competent authority.

After the merger and consolidation, the merged and consolidated credit institutions must ensure compliance with the provisions of law on safety limits and ratios, capital contribution ratios, share ownership and banking operating conditions.

Last month, the market saw the consolidation of four credit institutions. Namely, the Construction Commercial Bank (CB) was transferred to the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), while the Ocean Commercial Bank (OceanBank) was transferred to the Military Joint Stock Commercial Bank (MB).

Some other commercial banks also have plans to merge weak banks in the near future.

According to the SBV, the compulsory transfer of struggling credit institutions is a crucial step in restructuring the banking system. This measure is closely tied to addressing bad debts, ensuring macro-economic stability and upholding national financial security, which is of a paramount concern to the Government./.