The PGBank’s deal to merge with HDBank may not reach an agreement after the negotiation process

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PGBank’s “troubled marriage”

PGBank is not a “bad” bank, but so far it still has not been “married” successfully, although it has been approached by three banks, VietinBank, MB and HDBank.

The “marriage” between PGBank and HDBank is about to come to an end when the Board of Directors of PGBank will propsoe to shareholders to terminate the merger plan at the next meeting on March 30. These two banks have been approved by the shareholders for the merger from the beginning of 2018, but so far the deal has not been able to be closed. At the annual meeting of the last two years, the representative of Petrolimex, a major shareholder of PGBank, did not hide his disappointment because of the delay.

Since 2014, the 2 banks have started to approach PGBank, but until now, after more than 6 years, no deal has been made. Before HDBank, VietinBank was the bank that got close to finalize with PGBank, but it was not possible. The “in-depth negotiation” claimed by MBBank before also had no clear result.

PGBank is not a “bad” bank. By the end of 2020, the total assets of this bank will reach over 36,000 billion VND with a suitable equity of 3,000 billion VND. This number is among the lowest in the system, but the main reason is that the mergers lasted since 2014, so PGBank could not expand its scale due to the impact on valuation.

The biggest limitation of PGBank is the above ceiling ownership of Petrolimex. But this is also an advantage because this major shareholder can help PGBank easily expand its network through the network of gas stations. Experts believed that due to this “not bad” status quo, the deal is hard to be successfully closed.

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