YKVN has advised the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) on its mandatory acquisition of wholly state-owned Construction Bank (CB), with the deal being one of the first of its kind in the Southeast Asian nation.
“It is necessary for YKVN to propose tailored solutions and supporting measures for both Vietcombank and CB that must be approved by competent authorities to protect the bank’s interests and benefits during the acquisition of CB, including the expansion of its business scale, customer base and network,” Duong Thu Ha, YKVN’s lead partner in this deal, told Asia Business Law Journal.
The State Bank of Vietnam announced on 17 October that Vietcombank would mandatorily take over CB. As this is a mandatory transfer of underperforming banks by the state to Vietcombank, the transfer consideration is zero.
On the same day, the Vietnamese central bank also said the Military Commercial Joint Stock Bank (Military Bank) would compulsorily acquire Ocean Bank, in which Duong confirmed that YKVN was not involved. Such moves were part of the Vietnamese government’s plan to restructure underperforming banks and to stabilise the country’s financial market.
Duong, whose firm is the sole legal counsel in the deal, added that the legal framework for mandatory transactions of this type was introduced in 2017. But there was no precedent of mandatory transfers of underperforming banks in Vietnam before those made by Vietcombank and Military Bank.
The first phase of Vietcombank’s mandatory acquisition of CB has already been completed, and YKVN is now advising on the continued implementation of the acquisition.
“[This] includes [advising on the] drafting of the charter of internal rules and regulations of CB post-acquisition, and the regulatory and internal procedures and approvals for deploying supporting measures to assist CB’s recovery,” said Duong.
On completion of Vietcombank’s mandatory acquisition, CB will become a single-member limited liability commercial bank, with Vietcombank owning all of its charter capital.
