YKVN Advised Vietcombank On Landmark Mandatory Acquisition Of Construction Bank

YKVN Advised Vietcombank on Landmark Mandatory Acquisition of Construction Bank

YKVN has successfully advised the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) on its mandatory acquisition of the wholly state-owned Construction Bank (CB). This transaction marks one of the first of its kind in Southeast Asia.

Duong Thu Ha, YKVN’s Lead Partner on the deal, emphasized the importance of providing tailored solutions and support measures for both Vietcombank and CB. “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,” he stated.

On October 17, the State Bank of Vietnam announced that Vietcombank would mandatorily take over CB. The transfer involves zero consideration as part of the state's initiative to restructure underperforming banks. In conjunction with this announcement, the central bank also disclosed that the Military Commercial Joint Stock Bank (Military Bank) would compulsorily acquire Ocean Bank, a transaction in which YKVN was not involved.

Duong noted that YKVN is the sole legal counsel for Vietcombank in this acquisition. “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,” he added.

The initial phase of Vietcombank’s acquisition of CB has already been completed, and YKVN continues to advise on the subsequent steps of the acquisition process. “[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.

Upon completion of the acquisition, CB will operate as a single-member limited liability commercial bank, with Vietcombank as the sole owner of its charter capital.