Vietnam's State Bank Advances Mandatory Transfer of DongA Bank to HDBank

The State Bank of Vietnam on 17 January 2025 announced the mandatory transfer of DongA Bank to HDBank, making it a wholly owned HDBank subsidiary, as part of its structured effort to resolve institutions that have remained under special supervisory arrangements for an extended period.

DongA Bank has been subject to special supervision by the State Bank of Vietnam since 2015, following the identification of serious financial and governance problems at the institution.

MANDATORY TRANSFER AS RESOLUTION MECHANISM

The mandatory transfer mechanism under Vietnamese banking law allows the State Bank to direct the transfer of a troubled institution to an acquiring bank without requiring the consent of the transferring bank's existing shareholders. Unlike a commercial acquisition negotiated on market terms, the mandatory transfer framework places the SBV in the role of directing the transaction and setting the conditions under which the acquirer takes on the troubled institution.

The transaction is part of the SBV's programme to reduce the number of banks under special supervision, a group that has also included other institutions dealt with through separate resolution processes. The Vietnamese government and the SBV have publicly committed to completing the resolution of these institutions.

BACKGROUND

The bank's problems included governance weaknesses and problematic loans, and its management came under criminal scrutiny.

HDBank is a commercial bank with retail and corporate banking operations and a presence in consumer finance through affiliates. The transfer, announced together with the mandatory transfer of GPBank to VPBank, resolved the last two banks under special control, after CBBank and OceanBank were transferred to Vietcombank and MBBank in October 2024.