Viet Nam National Financial Switching Joint Stock Co. (Banknetvn) and Smartlink Card Services Joint Stock Company (Smartlink) yesterday signed a contract to officially merge.
|The two largest banking card networks in Viet Nam, Banknetvn and Smartlink are merged in a move to develop infrastructure for retail banking and non-cash payments in Viet Nam. — Photo vietstock|
Both companies are two of the largest and most exclusive banking card networks in Viet Nam. The move followed a decision signed by Prime Minister Nguyen Tan Dung early this week, as per which the new entity will have five years exemption from monopoly regulations.
This period will be renewed automatically if the parties adhere to the rules. Monopoly exemption was the last and most important condition needed for the merger of Banknetvn and Smartlink.
The new company, named Banknetvn, will have the State Bank of Viet Nam as its largest shareholder. Its goal is to develop infrastructure for retail banking and non-cash payments in Viet Nam.
Banknetvn Chairman Pham Tien Dung informed that the new company will make its debut in the first quarter of 2015.
He disclosed that after the merger, Banknetvn will come up with a new business strategy to provide better services to customers without interfering with the banking services.
He said that scrutiny of the ATM and POS systems of the commercial banks will also be conducted to enhance investment effectiveness, reduce social costs and improve service quality. These steps will be taken to develop and diversify the added value based on the unified switching systems as well.
The new company will also take charge of developing the national chip card standard set copyrighted by Viet Nam, but compatible with international standards. This set is due to run on trial next year.
The merged card alliance is expected to help banks save resources and infrastructure investment costs. The payment and money transfer transactions will be more convenient and faster. Customers will also have the opportunity to enjoy more benefits from the modern payment methods.
The concept of forming the unified system of payment cards in Viet Nam was introduced in 2003. In 2007, Banknetvn was founded by three State-owned commercial banks – Bank for Agriculture and Development of Viet Nam (Agribank), Policy Bank, and Bank for Investment and Development of Viet Nam (BIDV).
The second card union – Smartlink – was founded in 2007. It was created in cooperation with the Bank for Foreign Trade of Viet Nam (Vietcombank) and 15 joint-stock banks. The market also saw the establishment of the third card union, Vina Smart Card Joint Stock Company (VNBC), which then merged with Banknetvn.
The merger of SmartLink and Banknetvn was approved in November 2012. The parties agreed to invite independent auditors to evaluate the assets of both banks. The task was scheduled for completion before December 12, 2012.
However, the procedure took longer than expected. The companies were particularly late in seeking the government's approval for exemption of monopoly. The reason this problem cropped up was that both the banks planning to merge are also the only two card alliances on the market.
The current regulations prohibit economic concentration if the combined market share of the firms intending to merge accounts for more than 50 per cent of the market.
The economic concentration (merger) only enjoys a monopoly exemption if it contributes to the country's development. The prime minister is authorised to consider and decide on the grant of monopoly exemption.