More Viet banks set for mergers amid pressure from govt

Hanoi

VIETNAMESE bank consolidation will accelerate this year as a new rule encourages lenders with stakes in each other to merge or unwind their holdings amid a government pledge to push unions and even force bankruptcies.

Renewed calls for restructuring come with teeth this time after a new rule restricting banks' cross-ownership took effect in February. The central bank has said there will be at least six mergers this year and recently took the unprecedented step of nationalising two unlisted banks. JSC Bank for Foreign Trade of Vietnam, the largest bank by market value, said last month it's looking for a partner to merge with this year.

The State Bank of Vietnam, the monetary authority, plans to reduce the total number of banks to as few as 15 by 2017 from 40 now. Investor confidence is rebounding as the country's weakest lenders have been absorbed by larger banks and bad debt that was the highest in South-east Asia just a few years ago has b…