AsemconnectVietnam - The share swap ratio in a merger deal between Saigon Thuong Tin Commercial Bank (Sacombank) and Southern Bank has been announced at 1:0.75, according to a merger scheme released on June 29.

The two banks completed the merger scheme earlier this year with 0.75 share of Sacombank exchanged for one Southern Bank share. The consolidated bank will be named Sacombank with chartered capital of over VND18.8 trillion (US$864 million).

Sacombank will hold an annual general meeting on July 11 to seek approval from shareholders for the merger.

At present, the two banks have combined capital of VND16.4 trillion, with VND12.4 trillion belonging to Sacombank. Sacombank will add VND2.4 trillion to its chartered capital by paying dividend and bonus shares for shareholders.

For every Sacombank share held, shareholders will receive an additional 0.387 Sacombank share, including 0.087 share from the share swap with Southern Bank, 0.08 share via a 2013 share dividend payment at 8%, 0.12 share via a 2014 share dividend payment at 12% and a bonus share payment from treasury shares and capital surplus at 0.0875 share and 0.0125 share respectively.

The central bank is expected to approve the merger scheme in the third quarter of this year. The additional Sacombank shares will be listed in the last quarter.

Arrangements for transaction units, branches and staff at the two banks will also be completed in the fourth quarter.

The merged bank plans to maintain the staff structure of the current Sacombank and recruit qualified leaders from Southern Bank. The new bank’s board of directors will have nine members (the same as the current Sacombank) while the board of controllers will add two more to have five and the board of management will add five to have 25.

The current general director of Sacombank will hold the same post at the merged bank.

Sacombank now has 12,600 employees and Southern Bank has 2,900. After the merger, the new institution will have 112 branches and 526 transaction offices in the country and two subsidiaries and nine branches overseas.

The consolidated bank will have total assets of nearly VND291 trillion and a bad debt ratio of 3%. It plans to pay dividend for shareholders at 3% annually between 2015 and 2017.

The bank targets after-tax profit of VND782 billion in 2015, VND883 billion in 2016 and over VND1 trillion in 2017, which is lower than VND2.2 trillion last year.

In 2014, Southern Bank reported after-tax profit of VND17 billion with a bad debt ratio of 5.92%. It is among the ailing banks that must be restructured as ordered by the central bank.

Earlier, a leader of Sacombank told the Daily that the consolidated bank would need much time to do the restructuring and gain healthy growth. The priority goal of the merged bank will be to cope with bad debt and liquidity issues.

Closing on June 29’s session, Sacombank shares (coded STB) stood at VND18,600 each while Southern Bank shares were VND8,000 each on the over-the-counter (OTC) market, rising strongly against April when the merger scheme was announced.

There have been few transactions of Southern Bank shares as investors are waiting for the share swap.

Source: The Saigon Times